Focus on Energy, 2010 - Karanovic & Nikolic

BOSNIA ANDHERZEGOVINABosna i Hercegovina/Босна и ХерцеговинаBANJA LUKABosnia and Herzegovina consists of the Federation ofBosnia and Herzegovina and the Republic of Srpska. Ithas a population of over 4.6 million people. This countryhas experienced steady economical growth since the mid1990’s when the civil war ended. The country has enormousenergy potential, especially in the area of hydro energy; it isthe only country in the region that it is able to fully satisfy itselectricity demands by domestic production. Furthermore,it is exporting energy to its neighbours.SARAJEVO56BIH ENERGY SECTOR OVERVIEWIntroductionFOCUS ON ENERGYIn brief, Bosnia and Herzegovina (“BIH”) has several levels of political structuring under the overall federalgovernment level. The most important of these levels is the division of the country into two entities, thesebeing the Republic of Srpska (“RS”) and the Federation of Bosnia and Herzegovina (“FBIH”). In additionto these, the Brčko district in the north of the country was created in 2000 out of land provided by bothentities. It officially belongs to both entities, but is governed by neither of them, and functions under adecentralized system of local government.The energy sector in BIH essentially reflects the constitutional organization of the country. This means thatthe legal framework for the sector has been fragmented on several levels between the state and the separateentities. Therefore it is not as straight forward as some of its neighbouring Balkan jurisdictions.Energy has been recognized as one of the most valuable assets that BIH owns. Although there were no majorinvestments in new production facilities over the past twenty years, lately all levels of governance havemade the increasing of energy production a real priority. There has been a declaration by key stakeholdersthat electricity will be one of the major goods that BIH will export.Currently, the majority of the energy infrastructure is operated by state owned companies, although someof them are listed on the domestic stock market. Lately, there has been an increase in investment in theelectricity sector.The Parliaments of both entities have adopted respective electricity laws regulating the respective entities’competences in the fields of electricity’s production, distribution, supply and trade. The legislation alsoentitles the respective regulators to issue and revoke licenses for commercial activities in the electricitymarket. Both entities have similar rules governing electricity whereas for oil and gas there are certain differencesprimarily related to the fact that the RS has adopted new laws on energy, oil and gas 1 .1 The Law on Energy (Official Gazette of the Republic of Srpska no. 49/09), The Law on Oil and Oil Derivatives (Official Gazette of the Republic ofSrpska no. 36/09), The Law on Gas (Official Gazette of the Republic of Srpska no. 86/07)