The adoption of the Law on Electricity at the level of Bosnia and Herzegovina is one of those rare moments when a political blockade directly hits the core of the state’s economic interest.
For more than a decade, this law has been stuck between entity jurisdictions, party calculations and disputes over energy authorizations, while the country simultaneously misses the opportunity to form its own electricity exchange and modernize the market in accordance with European standards.
Now, when the entity agreement has finally been reached and the law is being prepared for the parliamentary procedure, the question opens up, will BiH manage to catch the last train before new European mechanisms, such as CBAM, further burden the domestic economy and exporters?
Because what appears on paper to be a technical issue of the energy market, is essentially a test of state functionality, political will and ability to finally put economic interests before party ones.
The law on electricity at the BiH level is crucial for Bosnia and Herzegovina to have a more favorable economic and economic situation, and finally to have its own electricity exchange and thus improve the overall economic picture in the country.
There are many reasons why it has not been adopted so far, but the key one is of a political nature.
The law will be before parliamentarians next month
Finally, entity agreement was reached for this important law to go into the parliamentary procedure.
Both houses of the Parliamentary Assembly of BiH reached agreement on the shortened procedure, and it is expected that it will be on the agenda at the first regular session of the House of Representatives of the Parliamentary Assembly of BiH, which will be held in November.
Nermin Mandra, a representative of the SDA in the Parliamentary Assembly of BiH and a member of the Joint Commission for Economic Reforms and Development, tells Faktor that this law should have been adopted a long time ago and that he is sure that it will be confirmed in both houses of the Parliamentary Assembly of BiH because there is entity agreement.
– This is one of the most important and complex laws and it is especially important for the electricity market considering the rise in electricity prices – said Mandra.
CBAM will significantly increase costs
Ermina Salkičević-Dizdarević, representative of the SDP in the Parliamentary Assembly of BiH and chairperson of the Joint Commission for Economic Reforms and Development, points out to Faktor that the Law was on the agenda at the last session, but that it did not go through the urgent procedure, but was returned to a shortened one.
– This law should have been adopted a year ago, I am not sure that even if we manage to adopt this law now, we will finish everything by the end of this year, because on January 1, 2026, the CBAM mechanism (Carbon Border Adjustment Mechanism), introduced by the EU, will come into force. It will significantly increase the cost of exporting products produced using electricity from fossil fuels, which especially affects producers of electricity, cement, steel, of aluminum and fertilizers in Bosnia and Herzegovina. It will also be a problem to go public outside BiH because it will not be possible without a new law, and this will create a new problem for domestic electricity users because the sale of electricity on exchanges outside BiH has subsidized the price for households – points out Salkičević-Dizdarević.
Transparency and competitiveness
A few days ago, Vedran Lakić, Federal Minister of Industry, Energy and Mining, said that the new law ensures modernization and compliance with EU standards, maintaining the existing structure and institutions – SERC, NOSBiH and Elektroprijenos BiH, and introduces the electricity exchange, which further strengthens market transparency and competitiveness.
– By establishing the electricity exchange, we achieve a balance and create conditions for the development of a modern market, which will bring benefits to both producers and consumers – stressed Minister Lakić.
He also noted that the Government of the Federation of BiH, with a firm stance and continuous negotiations, ensured that the provisions on natural gas, which were previously the subject of dispute, were omitted from the law.
By adopting this law, BiH will fulfill one of the EU’s key conditions for postponing the application of the CBAM mechanism to electricity until the end of 2025, which will protect the domestic economy and maintain the competitiveness of exporters.
The new Law on Electricity brings legal and institutional security and enables BiH to remain part of the European trends in energy.
The text of the law is the result of a broad and transparent process led by the Ministry of Foreign Trade and Economic Relations of BiH, with the active participation of experts from entity ministries, the State Regulatory Commission for Electricity (SERK), Elektroprijenos and NOSBiH. Technical support was provided by projects of the Government of the USA (Assistance to the Energy Sector – EPA) and the European Union (EU4Energy), and the law was supported by both entity governments, the Government of Brčko District of BiH and the Energy Community.
The main brakeman of politics
Amer Jerlagić, energy expert and former director of JP Elektroprivreda BiH, points out for Faktor that through Dayton and after Dayton, electricity was given to the entity level.
– In Bosnia and Herzegovina, we currently have the Law on Electricity Transmission and the Independent Operator of the Electric Power System of Bosnia and Herzegovina, and that was passed more than 20 years ago, and in general there is no law on energy that would include gas. Unfortunately, we see that it is not included in this new proposal and now this new law deals with the establishment of an electricity exchange based in Mostar – says Jerlagić.
He points out that if we talk about the benefits of this law, it is good that BiH finally gets its own stock exchange, because according to the environment we have in BiH and three state electricity companies and several private operators, we could have had a stock exchange a long time ago, maybe even before Serbia and Croatia.
– Unfortunately, it took a long time, practically 15 years to try to pass such a law and to establish the exchange, so the biggest benefit of this law is that we will have an established domestic electricity exchange, that it will be possible to trade electricity within BiH through that exchange between all the operators who are present, and even these producers of electricity from renewable sources – Jerlagić said.
Speaking about what BiH loses if it does not have this law, Jerlagić said that the state will be forced to trade electricity exclusively through stock exchanges outside of BiH.
– Now if we know this story about CBAM and the energy that would eventually come out of Bosnia and Herzegovina, with all the repercussions that CBAM brings with it, I am afraid that the ratio of electricity sales from Bosnia and Herzegovina will be significantly lower than it was before, because the penalties for CBAM are huge – Jerlagić said.
He points out that politics is the brake on this law and that there is not even a millimeter of profession.
– This is another law passed at the level of BiH, a law that, in a way, strengthens the institutions of BiH, and we know very well who has been blocking any law at the level of BiH, i.e. the establishment and strengthening of the institutions of BiH, Jerlagić concludes, writes Factor.
