Bosnia and Herzegovina in ENERGY

COMMUNITY state of play

Janez Kopa
Director, Energy Community Secretariat

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 October 2005 signature

July 2006 enters into force

01/01/2007 BG + RO join EU

BULGARIA ROMANIA

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THE COMMUNITY A LOOK AT THE MAP
Status: February 2013

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 INSTITUTIONS
MINISTERIAL COUNCIL
Political decisions
PERMANENT HIGH LEVEL
GROUP

REGULATORY BOARD (ECRB) Advisory body

Working groups, Task forces

Monitoring,
SECRETARIAT (VIENNA)
coordination, support

JUDICIAL FUNCTION DISPUTE SETTLEMENT PROCEDURE

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 THE COMMON LEGAL FRAMEWORK

Gas (Third package)

Electricity (Third package)
Environment
Competition
Renewable energy sources (RES Directive)
Energy efficiency
Antitrust and state aid
Statistics
Oil

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MAIN UPCOMING LEGISLATIVE NETWORK

Energy Statistics by 31st December 2013

Directive 2009/28 on Renewables by 1st January 2014

Third Package on electricity / gas by 1st January 2015

+ missing rules from Second Package !

Large Combustion Plants Directive by 31st Dec. 2017

Sulphur in Fuels Directive was due for 31st Dec 2011 !!

Energy Efficiency was due for 31. Dec 2012!!

Oil stocks by 1st January 2023

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BOSNIA AND HERZEGOVINA
Electricity

Gas

Energy efficiency

Environmental acquis
Large Combustion Plants Directive,
Wild Birds Directive,
Environmental Impact Assessment Directive,
Sulphur in Fuels Directive

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ELECTRICITY (1)

Implementation of the Second Package:

FBiH the new Electricity Law is being drafted for the past two years and not
adopted yet ,

The RS legislation in electricity is more advanced, it does need certain

amendments (primarily in the provisions linked with market liberalization),

The Laws on State level are the most critical ones dated back from 2003
and 2004, they have relatively large gaps remaining from the compromises
taken at that time and now need a more substantial revision the scope of
functions and competences of the companies and the organization of the
electricity market functions need to be addressed in a more comprehensive
manner,

Brcko District legislation - must address all the basic provisions applicable to
RS and FBiH.

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ELECTRICITY (2)

Compliance with the Third legislative Package

The EU-IPA Project is an exceptional opportunity for BiH for fast

advancement in electricity state of legal compliance with the EU, and needs a
due attention from all stakeholders.

Several important aspects to keep in mind:

the Project is already rather behind the schedule and requires full
commitment and due attention in the remaining period in order not to end
up short of deliverables;
the Project should address the basic secondary legislation (to the
highest applicable level) at least with respect to basic regulatory rules (e.g.
grid codes, market rules etc.);
keep in mind required follow-up activities which need to be anticipated,
planned and further supported through the Project future implementation
steps shall be needed (e.g. such as the ENTSO-e Network Codes) and
practical measures (such as the ones related to market integration on a
regional level);
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ELECTRICITY (3)
Organization of the electricity market:
The organization and operation of the local electricity market in BiH has not achieved
anywhere significant level of competition the trading arrangements are made mainly
with the utilities (Elektroprivreda-s or their subsidiaries) while the retail supply is
limited within their own boundaries.
The eligibility status is not problematic any more, and a significant effort was made
last year by providing new switching rules and corresponding switching support (which
is again provided by the same Utilities and depend on implicitly regulated prices
substitute for the lack of competition in the area of supply), we are still expecting to
witness any effects of an open market or signs of increased trading liquidity.
Conservative structural organization of the local market the unbundling of the
functions within the utilities in FBiH is not completed, the market dominance is
significant in all jurisdictions. The wholesale trading arrangements are long-term and
bilateral there are no spot-trading platforms available (such as Day-ahead market).
The ancillary services and the balancing are regulated no market based instruments
are yet developed.
The new legal framework which is going to be developed through the Project for
compliance should provide for a new market model.

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ELECTRICITY (4)
Security of electricity supply:

The legal framework for security of supply in the domain of electricity still needs to be
transposed and adequately enforced. There are a number of provisions and requirements related to
planning, adequacy and monitoring which are missing.

The most urgent question however in the domain of electricity security is the status and treatment
of Elektroprenos the single transmission operator of BiH. If there is a neuralgic point on the
electricity corpus of BiH it is this company, and it should not come as a surprise that EnC is deeply
concerned with it, for more than one reason.

The existing legal framework relevant for operation of the Transmission Company has not been
sufficiently enforced or applied some obligations important for the security are not observed.

The long-standing stalemate (five consecutive years) in the Company management prevents
adoption of the acts and implementation of the instruments for planning and development of the
network.

Despite the significant accumulated funds, the same lack of effective management prevents
execution of the required investments anywhere above insignificant level which could develop to
the status when even the maintenance operations may become problematic.

This growing concern brings us to consider initiating another infringement case against the
Government of BiH on these grounds.

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GAS
The Secretariat continued its case ECS-8/11 against Bosnia and Herzegovina.
Issues of non-compliance by Bosnia and Herzegovina in the gas sector are many-fold and
include the lack of regulatory authorities for gas in the FBiH and at State level; the lack of
proper legal, functional and account unbundling in both entities, the lack of properly set and
published network tariffs, issues related to exemptions for new infrastructure in the
Federation, the lack of market opening in line with the deadlines set in Directive 2003/55/EC
as well as different treatment of national and cross border transmission.
ln Republika Srpska, a Law on Gas was amended as a response to the Secretariats Opening
letter in the present case. The amendments took effect on 2 January 2013. However, the
practical implementation is still missing. Similarly, the Ministry of Energy, Mining and Industry
of the Federation of Bosnia and Herzegovina as a response to the Opinion and the Letter
developed a pre-draft Law on Gas. At the time, however, it has not yet been adopted. The
pre-draft consists some issues of severe non-compliance as well.

INVESTMENTS : Zenica - Travnik Pipeline construction is progressing. The other BH-Croatia

connecting project (the Northern connection Brod Zenica) needs clear affirmation from Republika
Srpska through which territory is planned to pass.

Investments, the opening of markets and infrastructure developments will suffer from lack
of an appropriate legal and regulatory framework. Concrete results are urgently needed.
Bosnia and Herzegovina is lagging behind all other Contracting Parties, including the
newcomers! Bearing in mind that the deadline for implementation of the Third Package is
approaching, this gap will become even wider if nothing changes.

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ENERGY EFFICIENCY (1)
1. DIRECTIVE 2006/32/EC ( ON ENERGY END-USE
EFFICIENCY AND ENERGY SERVICES)
- by 31 December 2011
2. DIRECTIVE 2010/31/EU ON THE ENERGY PERFORMANCE
OF BUILDINGS (EPBD) RECAST DIRECTIVE 2002/91/EC
- by 30 September 2012
3. DIRECTIVE 2010/30/EU ON LABELING (RECAST DIRECTIVE
92/75/EEC) AND IMPLEMENTING DIRECTIVES/DELEGATED
ACTS (ELD)
by 31 December 2011 / 31 December 2012

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ENERGY EFFICIENCY (2)
By the end of 2012, draft energy efficiency law and secondary legislation has been
drafted in both entities, with EU IPA technical assistance and Secretariats
permanent guidance - legislative package is prepared to transpose completely the
requirements of Energy Community acquis on energy efficiency (the process of
adoption of these laws by administration in both entities is very slow or stagnating );

The first draft of the Energy Efficiency Action Plan was submitted to the Secretariat
in February 2012. It includes all the elements required by the Energy Service Directive.
The document has to be adopted in both Republika Srpska and in the Federation of
Bosnia and Herzegovina and was not! The ECS has mobilized the technical assistance
of the GIZ ORF E and USAID to help BiH to prepare the Plan and after that, BiH (at the
entity level) has not adopted them in the governments;

The second priority should be the adoption of legislation dealing with energy
efficiency in buildings (recommendations of the regional Study on Energy Efficiency
in Buildings).

Moreover, the internal coordination between authorities and entities needs to be

improved as a precondition for further progress in 2013 and beyond.

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ENVIRONMENTAL ACQUIS (1)
1. Council Directive 85/337/EEC of 27 June 1985 on the assessment of the
effects of certain public and private projects on the environment, as amended
by Council Directive 97/11/EC of 3 March 1997 and Directive 2003/35/EC of
the European Parliament and of the Council of 26 May 2003 (the
Environmental Impact Assessment Directive);

2. Council Directive 1999/32/EC of 26 April 1999 relating to the reduction in the

sulphur content of certain liquid fuels and amending Directive 93/12/EEC (the
Sulphur in Fuels Directive);

3. Directive 2001/80/EC of the European Parliament and of the Council of 23

October 2001 on the limitation of emissions of certain pollutants into the air
from large combustion plants (the Large Combustion Plants Directive)
and

4. Article 4(2) of Directive 79/409/EEC of the Council of 2 April 1979 on the

conservation of wild birds (the Wild Birds Directive).

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ENVIRONMENTAL ACQUIS (2)
The Environmental Impact Assessment Directive has not been fully transposed yet.
Progress has been registered, both in the FBiH and RS. According to the analysis of the
European Commission, the existing legal framework in the Federation of Bosnia and
Herzegovina (established in 2003) provides a level of transposition amounting to 84,5%.

In both entities, the implementation of Article 4 of the Wild Birds Directive has yet to
begin. In the FBiH, there is a new Law on Nature Protection undergoing parliamentary
procedure since September 2012.

Sulphur in Fuels Directive is not respected and the Secretariat had to launch a dispute
settlement case against Bosnia and Herzegovina based on the improper implementation
of the Directive after the deadline of 31 December 2011. The case was launched in
February 2013 and currently the reply of the BiH authorities is being analysed.

Large Combustion Plants Directive - implementation deadline is 31 December 2017.

Therefore, the Secretariat does not yet monitor the proper implementation of the
Directive in the Contracting Parties, however, preparational work is taking place in the
framework of the Environmental Task Force of the Energy Community. It can be
envisaged that the full implementation of the Directive would provide a number of
challenges for Bosnia and Herzegovina, which should be overcome by the deadline set
out in the Treaty.

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 THANK YOU FOR YOUR ATTENTION!

CONTACT

Energy Community Secretariat

Web: www.energy-community.org

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