Electricity sector reforms in Southeast Europe: the case of Bosnia and Herzegovina

As a result of the war in Bosnia and Herzegovina (1992 – 1995), electricity sector has been partly destructed and strongly devastated. The Dayton Peace Agreement signed on December 1995 put an end to the war in Bosnia and Herzegovina but it also created a complex and dysfunctional institutional structure divided along ethnic lines. Dysfunctionality could be especially seen in energy sector due to different institutional and regulatory framework in each entity. The analysis shows that Bosnia and Herzegovina’s electricity sector is strongly dependent on hydro power with the share of 70% in generation installed capacities, while the rest is in thermo power plants (coal-fired). However, the mix of thermo and hydro generation capacities is not equally divided between the three vertically- integrated public electricity companies in three entities. Bosnia and Herzegovina has become an important exporter of electricity, especially in Croatia, however export of electricity is highly dependent on hydrological conditions. The aim of the paper is to give an overview of electricity sector and electricity market in Bosnia and Herzegovina with the special reference to conducted reforms and changes that have to be done in accordance with the EU Acquis because Bosnia and Herzegovina is the Energy Community Member State. Our hypothesis is that Bosnia and Herzegovina is burdened with complicated institutional and regulatory settings in energy sector and because of that burden the reforms results are lagging behind other Southeast European countries. Complex constitutional organization of Bosnia and Herzegovina which devolves only limited explicit powers and authority to state level institutions with regards to energy matters represents one of the main obstacles in creating the single internal energy market and joining the regional energy market. The analysis is focusing wider regional context because neighboring countries (especially Croatia, Serbia and Montenegro) shared the common economic history, similar energy structures and similar characteristics of their electricity sectors. These countries are also strongly included in cross-border trade in electricity with Bosnia and Herzegovina.