Electricity imports in BiH out of control, new blow to citizens' pockets possible

(Patria) - Data on electricity exchange are being considered more and more seriously, at least by experts. Bosnia and Herzegovina is becoming an importer from a major exporter. Perhaps a new price increase will be considered soon.

Mines produced a million tons less coal last year, which led to a drop in electricity production. This is how Elektroprivreda Bosne i Hercegovine explains the increase in electricity imports. Mines have thus become the scapegoat, although, as union representatives have been saying for years, underinvestment and poor management by the Consortium of Elektroprivreda BiH have led the mines into a catastrophic situation, writes N1.

"In terms of energy, this is about 1,000 GWh of unproduced electricity in thermal power plants, which, along with dry hydrological conditions, has caused insufficient amounts of electricity from our own production facilities, and EP BiH was forced to increase the purchase of electricity to meet the needs of the BiH electricity system," stated Elektroprivreda BiH.

And this at a time when prices on the stock exchanges have significantly increased. Because of this, in the first four months alone, 220 million marks more were allocated for electricity imports than last year.

"Prices on the market exchanges are higher, and this puts us in a situation where we have the consequences of not adopting the Law on Electric Energy at the state level, and on the other hand, an exchange has not been established. BiH is the only country in the region without an exchange, so we cannot trade directly. We are now selling energy for 100 euros per megawatt hour, and importing at 300-400 euros. That's where the monetary difference arose," explained Nihad Harbaš, an energy expert.

"Basically, there can be two reasons for the increase in electricity imports into a country. The first can be due to exceptional demand because of economic development. This has not happened in BiH, and we can see this through the decline in industrial production. The second reason relates to the fact that there is likely a decrease in the supply of electricity from domestic companies that distribute it. To close this gap between supply and demand, imports are resorted to. This can mean pressure for companies and the economy, and a move towards increasing the price of electricity for legal and natural persons. This will be faster and easier for business entities, and more difficult for individuals. However, we see that trends have started where this is happening in both entities and consequently in the Brčko District," stated economist Admir Čavalić.

Currently, surplus electricity is sold to intermediary companies. According to one analysis, Elektroprivreda often sells surplus electricity at lower prices than on the stock exchanges, so in 2022 alone, the company missed out on revenue of 32 million euros due to price differences. On the other hand, the increase in imports is now completely out of control, as there are no indications of a significant increase in electricity production.

"This directly harms the BiH economy, as well as Elektroprivreda itself. We have sufficient capacities, and if they are used properly, we can not only meet our own needs at lower prices. We already have great potential for electricity exports, greater inflow of money, and numerous positive effects that come with it," stated Igor Gavran, economic analyst.

While there is no significant increase in capacity, coal production in the mines in the Federation has been halved in the past six years. Elektroprivreda BiH points out that institutional and social support is necessary for the realization of the investment plan in new renewable energy sources. In this regard, the Growth Plan funds are a missed opportunity.

"Capacities are very poorly managed, we have increasingly frequent cases where certain production capacities, especially in Republika Srpska, stop working for extended periods. In the Federation of BiH, production is reduced because they cannot get sufficient quantities of coal, most often, but there are other reasons as well. Then, there are almost no new capacities, or their construction is very slow," added Gavran.

Without significant investments, without an increase in electricity production, with failed projects and higher import costs - a dark scenario is becoming increasingly likely. The first real consequence, according to our interviewees, will be an increase in electricity prices for citizens.