Sources of Energy in Bosnia and Herzegovina, and Implications for Energy Security
May 9, 2011
By Lana Pasic
The importance of energy security, highlighted by the continued utilization of old energy sources and exploration for new ones, is a topic of great significance for the Balkans, in the light of the scarcity of resources such as oil and uncertain consequences of nuclear energy. Although Bosnia & Herzegovina has an abundance of energy resources, its policies and strategies have not been sufficient for the long-term planning of energy use.
In fact, despite its energy potential, BiH is far behind its neighbors when it comes to the development of the institutions and strategies in this area, as has been noted by the International Energy Agency.
Own Production of Traditional Sources of Energy
Bosnia & Herzegovina has abundant resources of two traditional energy sources: coal and water. Some 55% of generated power is thermo-electric, while the remaining 45% is hydro-electric, according to the European Association for Coal and Lignite. Coal is the main source of energy in Bosnia, including dark coal, lignite and treset. It is produced from local mines throughout the country and the estimated reserves are more than six billion tons.
Hydropower has great possibility for further development, as only one-third of its potential has been utilised. When it comes to the European countries, Bosnia is in the 8th place with its hydro-potential, reports BH News.
However, at present small power plants are mostly being built and used. Foreign companies are however looking into utilizing the water wealth of BiH for power generation. The prime example here is Canada’s Reservoir Capital Corporation, which in October 2010 inquired with the Republika Srpska entity government to build three power plants there.
Imported Sources of Energy
Despite the presence of untapped energy resources in the country, BiH remains very much dependent on imported energy sources, particularly gas and oil.
Gas is imported by Bosnia from Russia, through Ukraine, Hungary and Serbia. It is widely used in the cities, but it is also limited to those areas, while outside of them there is no infrastructure for gas supply. Although the country’s gas infrastructure is not broadly developed, its dependency on imported energy was devastating for urban populations during the 2009 gas crisis.
At that time, Russia halted its gas export to Europe due to a dispute with Ukraine: BiH was the only country in Europe which was left with no gas reserves. Those households and businesses with no other sources of energy supply were hit hard, especially considering the fact that the event happened during the wintertime. Most transferred to using electricity, which overburdened the electrical power system. The reserves were borrowed from Hungary, Germany and Serbia, and alternative energy sources were used.
The agreements were signed between BH Gas with Hungarian (Mol) and Serbian (Srbijagas) counterparts for transporting the gas. There are plans for developing further gas transport infrastructure.
However, the overall chronically non-cooperative political situation in the country means that projects of this scale are not being done between both entities, and are thus limited to entity-level projects, connecting the Federation with Croatia and Republika Srpska with Serbia. The Ministry of Trade has given support to an Ionian-Adriatic Gas Pipeline Project, as noted in the OSCE 2010 Report on Security of Energy Supply in Bosnia and Herzegovina.
Bosnia’s dependency on oil imports means that it is completely vulnerable to international energy fluctuation scenarios. There is no oil production, and no oil stocks. Oil is imported from Croatia, Serbia, Montenegro and Hungary, notes the OSCE report.
The refinery in Bosanski Brod has recently been restored and privatised. Its majority owner now is Zarubezhneft, and a 5-year investment plan has been created for the refinery, reported SEE News. The refinery means that Bosnia will now have its own source of oil derivatives, which will impact positively on the energy security, but also on the employment levels, added The New York Times.
Regional Solutions to Energy Security Problems
The landmark 2005 Energy Community treaty was signed in 2005 between the EU and nine Southeastern European countries (including BiH)- an act that indicated the political commitment of the member countries and the donors. The treaty created the Energy Community of South East Europe (ECSEE), proposing the regional energy market and common policies for gas and electricity, which would be in line with the EU standards and in accordance with EU’s Internal Energy Market.
The ECSEE aims to equalise the energy supply and demand in the region and it also allows countries to borrow funds for the improvements in the energy sector, according to a report from the World Bank. Mining and hydropower infrastructure improvement projects are envisioned. The treaty is supposed to contribute towards the economic development of the entire SEE region and bind the countries, formerly at war, in a common cooperation project, believes the International Energy Agency.
What Can Be Done?
BiH has various potential energy sources which need to be explored and utilised in order to avoid the dependency problem being perpetuated. More concentrated use of hydropower would be advantageous. Further, the potential of BiH for development of renewable energy sources, including wind, solar, biomass and geothermal energy is the largest in the region, according to BH News. Although making use of new and renewable sources of energy is costly, it is advisable that these are considered as a long-term investment with profitable returns.
There are currently no wind or solar power plants in use in Bosnia. Twelve locations have been identifies as potential places for wind power plants and solar power plants would be particularly profitable in Herzegovina. Although the wind power plants are in planning, no polar plants have been envisioned for now, according to the OSCE 2010 Report on Security of Energy Supply in Bosnia and Herzegovina).
Conclusion
The lack of commitment on the part of Bosnian authorities to create long-term sustainable energy security strategies has been somewhat corrected by the EU initiative for regional cooperation in the energy market, policies and regulations. Cooperation with the states in the region is necessary for utilizing new sources of energy and stability in transport and supplies.
Although commendable, regional project can not replace state-level initiatives. The institutions, policies and strategies of BiH government in the area of energy security are weak and inefficient, however, critics argue. Greater cooperation within the state, at all levels, would be required in order for the country to achieve a measure of energy security. It is well understood that there is a need to work on common projects rather than to divide the cumulative energy potential according to the limited interests of the entities and their ruling politicians.
As has been noted, the energy sector in Bosnia has great potential. Yet in addition to the regulatory and legal framework, BiH must work on further developing its existing renewable energy sources. This is especially the case with hydropower. New investments could conceivably be made in wind and solar power plants as well. All of these have long-term profitability if steps are taken to guarantee political cooperation and stability.
Since these ideals are at present still far from the norm, the country cannot afford to neglect a short-term strategy in order to guarantee energy security, and avoid another scare similar to the 2009 Russia-Ukraine energy showdown. Since the need for imported energy remains high, taking measures to avoid vulnerability and problems with shortages of supply – partly, through monitoring oil and gas strategic reserves – would be a wise course for Bosnia’s leadership throughout the coming year and beyond.
Looking for More Balkanalysis.com Publications?
Find Balkanalysis.com articles in the Central And Eastern European Online Library (CEEOL)
Balkanalysis on Amazon Kindle