FBiH government adopts restructuring program for EPBiH, EPHZHB

The Government of the Federation of Bosnia and Herzegovina (FBiH) has adopted a restructuring program for the power sector in the FBiH, which envisages the unbundling of two state-owned energy companies – Elektroprivreda BiH (EPBiH) and Elektroprivreda Hrvatske Zajednice Herceg-Bosne (EPHZHB) – in accordance with the rules of the EU’s Third Energy Package.

The restructuring program has been sent to the Federation Parliament for approval.

According to the FBiH government’s press release, the program is related to other activities in the electricity sector, including the functioning of the Energy Regulatory Commission in the FBiH, especially with regard to its independence and the creation of preconditions for the functioning of the electricity market and the unbundling of regulated and market activities, as well as the modernization and restructuring of coal mines.

The key changes and obligations arising from the provisions of the electricity law in the FBiH, which will be covered by this program, are the functional unbundling of all activities, legal unbundling and independence of the distribution, and the accounting unbundling of supply into market-based and regulated supply. These requirements mean that apart from accounting unbundling, it is also necessary to unbundle production, distribution, supply, trade and other activities.

In addition, changes in the distribution segment need to be even deeper, since an even higher level of independence is required there, including a separate legal form, which means that the existing power utilities must establish subsidiaries for distribution that will have the status of distribution system operators (DSOs).

Unbundling of power utilities in several stages

The restructuring of power utilities is planned in several stages, with the first stage related to the implementation of the basic requirements set out in the electricity law, such as accounting and management unbundling and the establishment of DSOs. The timeframe for this phase is 15 months from the date of obtaining the approval of the Federation Parliament.

The restructuring program implies the full implementation of accounting and management unbundling, with the application of transfer prices between activities within power utilities. During this phase, the reshaping of the coal mines’ operations, including reducing the number of employees and carrying out investments, the FBiH government said.

At the same time, the power utilities would undertake additional analyses and, based on them, make decisions regarding the establishment of utilities for power services and the restructuring of mining activities, taking into account the organizational status of production and the future requirements for the construction of power plants that will replace existing thermal power plants (TPPs).

The implementation of decisions based on the analyses, with the prior approval of the FBiH government, will be the third phase of the program.