Federation Mines Fulfilled 63 Percent of Plan: Increase in Electricity Price for Households or Collapse of the Power Sector!

Instead of the planned 1.9 million tons of coal, the mines of the Elektroprivreda BiH concern dug 1.2 million tons in the first five months of this year. In percentage terms, this means that the miners of the seven mines of the Concern have realized only 63 percent of the plan. The table shows more precise data on coal production in the Federation, writes istraga.ba.

Precisely because of the drastic drop in production in the mines, Elektroprivreda BiH is forced to procure coal on the free market. This coal is significantly more expensive, which means that the production cost of electricity is also increasing. At the same time, the price of electricity on world stock exchanges is decreasing, so the revenues of Elektroprivreda BiH from sources are drastically falling. According to official data, the export of electricity from Bosnia and Herzegovina in the first three months of this year amounted to 171.8 million KM, which is 53.3 percent less than in the same period last year.

To clarify the situation in the power sector, we will further examine the production and sales prices of electricity in BiH and abroad.

The production cost of electricity in Elektroprivreda BiH is around 62 euros per megawatt hour (MWH). Elektroprivreda BiH sells over 70 percent of its produced energy to households. The current price of electricity for households is up to 35 euros. This means that Elektroprivreda BiH sells at least 70 percent of its produced energy at a price that is 30 euros lower than the production cost. Simply put, Elektroprivreda BiH produces one megawatt hour for 65 euros and sells it to households for 30 euros. Precisely the low price of electricity paid by households in the Federation of BiH causes huge losses for Elektroprivreda BiH, and therefore, an increase in the electricity price for all users is inevitable.

While the price of electricity on world stock exchanges was high, Elektroprivreda BiH could cover the losses caused by the low price of electricity for households by selling surpluses (the remaining 30 percent of produced energy) at market prices. Here are concrete indicators.

The photo above shows the daily price of electricity on the Hungarian Hupx exchange for August 23, 2022. At times on that day, the exchange price of electricity (daily sale) was almost 800 euros per megawatt hour. Elektroprivreda BiH was producing electricity at 65 euros then, and it could, at times, sell it at twelve times the price. This was precisely the cause of Elektroprivreda BiH's positive performance. EP BiH's profit for 2022 would have been even higher if, for example, the Parliament of the Federation of BiH, at the proposal of Aner Žuljević and Elmedin Konaković, had not adopted amendments to the Law on Electricity, which limited electricity prices for business entities in FBiH. Thus, for example, Arcelor Mittal sold iron at exchange prices (maximum prices), while receiving electricity at least five times cheaper than the exchange price. In this way, the profit of Elektroprivreda BiH was transferred to the accounts of Indian billionaires from the Mittal family.

Today, however, the situation on the exchange is different.

This is the price of electricity on the Hupx exchange for June 14, 2024. As can be seen, the maximum price of one megawatt hour is 140 euros, which is almost six times less than in the same period in 2022.

The drop in electricity prices on world stock exchanges has reduced the revenues of Elektroprivreda BiH from exports. At the same time, the price for households has remained the same. Precisely because of this, the operations of Elektroprivreda BiH are threatened. Therefore, an increase in the electricity price for households is inevitable. And not just by 12 percent. Otherwise, the power sector of BiH faces collapse.

Elektroprivreda BiH has sent a request to FERK for an increase in the electricity price, and at the last session, that item was removed from the agenda. The next session of the new composition of FERK is scheduled for June 28, when a decision will be made on a linear increase in electricity prices for households by 10 percent.