Electricity Sector Reforms in Bosnia and Herzegovina: Results and Policy Implications

Abstract

Analysis shows that electricity sector reforms in Bosnia and Herzegovina have not been implemented as they should according to the Third Energy Package and obligations deriving from the Energy Community membership. Despite the sanctions and infringement procedures for non-transposition of the Third Energy Package that has been adopted against Bosnia and Herzegovina, its legal and regulatory framework for the electricity market is still non-compliant with the Energy Community acquis. Legal framework harmonization with the Acquis communaitaire is completely missing on the state level in Bosnia and Herzegovina while the legal compliance with the Acquis is somewhat better on entity levels. Still, they do not comply with the Third Energy Package as well and this situation strongly hinders the required structural reforms and liberalization of the electricity market. Development of electricity market in Bosnia and Herzegovina has been also influenced by regional electricity market that started by European Union’s incentive. Extending the European Union internal energy market to its neighboring countries, the Energy Community aims to create a regulatory and market framework capable of securing reliable energy supply and attracting investments in the energy sector. All Contracting Parties from Southeast Europe started to implement reforms in the energy sector at a different pace, but Bosnia and Herzegovina has been marked as the worst performer. It is not wondering because Bosnia and Herzegovina is a victim of its own constitutional framework and political complexity. However, during 2016 some new developments have occurred that give some hope for this country to solve some of the obstacles for functioning national and regional electricity market.