STATUS OF REFORM TRANSITION

The project focuses on addressing key challenges in the sector, including the lack of a functional Independent System Operator (ISO) and the need for regulatory reform. The current regulatory framework in BiH is characterized by a lack of clear policy guidance for the regulators, including the Energy Regulatory Commission (ERC), the Energy Market Agency (EMA), and the State Electricity Regulatory Commission (SERC). This has led to a situation where the regulators are not functioning effectively, with the ERC and EMA facing difficulties in implementing their roles and responsibilities. The ISO Law, which sets the framework for the ISO, is not being respected or implemented, and the Third Liberalization Package, which requires legal unbundling or the establishment of an ISO, has not been passed. The project identifies several key issues that need to be addressed in order to move the sector forward. These include the need for a champion to lead the energy reform process, the difficulty in taking a leadership role in energy reform due to the Ministries' current staffing levels, and the lack of a consensual market design. The project suggests that a meeting be held with key stakeholders, including the Ministers responsible for energy, the Chairmen of the Board and General Directors of the Elektroprivrede, the Chairmen of the Regulatory Commissions, and the Chairman of the Board and General Director of the Transmission Company, to discuss and listen to their positions on these issues. The project also highlights the need for regulatory reform, including the unbundling of the transmission company, Transco, and the restructuring of the coal mines. The project suggests that an organized and focused program be implemented to restructure the mines, at a cost of approximately 700 MM KM, with 500 MM KM to be provided by EPBiH. The project notes that the problems associated with the coal mines are complex and cannot be solved by a merger with EPBiH. Overall, the REAP project aims to support the development of a more efficient and effective energy sector in BiH, with a focus on addressing key challenges and implementing regulatory reforms. The project suggests that a coordinated effort be made to move the sector forward, with a clear plan and timeline for implementation.