USAID Energy Policy Activity First Quarterly Progress Report

The objectives are to achieve better coordination, management, and transparency at all levels of BiH's regulatory framework, a simplified energy policy environment, and targeted technical assistance to integrate BiH's energy sector into regional and EU markets. The EPA is divided into four components: Natural Gas Technical Assistance, Electricity Technical Assistance, Cross-cutting Assistance on EU Accession Requirements in the BiH Energy Sector, and Cross-Cutting Assistance and Activities in Public Outreach. The Natural Gas Technical Assistance component focuses on creating the preconditions for and development of a BiH natural gas internal market, and its integration into the regional natural gas market. This includes addressing the design and adoption of regulatory and policy reforms, such as unbundling of gas pipelines, open access regulation, and rules on licensing, tariffs, and customer switching. The Electricity Technical Assistance component aims to enhance the smart grid features of the electricity network by developing a demand side response mechanism, instituting intra-day and day-ahead markets, and assisting newly unbundled electricity utilities, Renewable Energy Sources (RES) producers, and households and small commercial customers to benefit from a fully operational market. During the first quarter of the project, EPA staff performed start-up activities, including registration with tax authorities, opening a bank account, and registration of staff with necessary tax and insurance institutions. The Activity developed its draft Work Plan and Monitoring and Evaluation Plan and submitted them to USAID for approval. EPA also held meetings with key stakeholders in the energy sector to present the scope of the new technical assistance. EPA kick-started negotiations between relevant parties on coming to a consensus on the adoption of a state level law on electricity and natural gas, which is a crucial precondition for the implementation of EPA's activities on gas and some related to electricity. The Activity also conducted a detailed analysis and developed amendments to draft laws on electricity and renewable energy sources of Brcko District (BD). In the Natural Gas Technical Assistance component, EPA conducted activities to reconcile different positions of the FBiH and RS regarding the structure of the natural gas sector. EPA determined the key issues that need to be resolved in the upcoming period and organized bilateral meetings with entity ministries of energy and the BiH Ministry of Foreign Trade and Economic Relations (MOFTER) to discuss options for the division of competencies between the state and entity levels in the natural gas sector. In the Electricity Technical Assistance component, EPA invested considerable efforts into unlocking the multi-year deadlock in adopting the state level law on electricity and natural gas. EPA organized bilateral meetings with representatives of entity level ministries of energy and the BiH Ministry of Foreign Trade and Economic Relations to help resolve this political roadblock. Overall, the EPA has made significant progress in its first quarter, including the start-up of activities, development of the Work Plan and Monitoring and Evaluation Plan, and initiation of negotiations on the adoption of a state level law on electricity and natural gas.