Gas

State of compliance

Bosnia and Herzegovina stands far away from adopting a State law, which would regulate the gas market and transpose the main Third Energy Package requirements. Whereas the Federation of Bosnia and Herzegovina has not been willing to move ahead without a consensus on broader institutional competences at the State level, Republika Srpska has adopted a completely independent Law on Gas.

At present, one-half of the country has in general transposed the Third Energy Package in the gas sector, whereas the other half did not transpose virtually anything. In Federation of Bosnia and Herzegovina, a 2007 government decree fails to transpose any key principles of the gas acquis. The adoption of a new draft gas law has been stuck in Parliament for more than three years.

The country is subject to several infringement cases in this context as well as penalizing measures by the Ministerial Council since October 2015.
 

  • Unbundling

    Interconnectivity

    Bosnia and Herzegovina is situated at the end of supply routes. The only entry interconnection point has sufficient capacities for the whole country needs and is significantly underutilised used. Nevertheless, the access to natural gas is very limited in Bosnia and Herzegovina. The country has very ambitious plans to increase its internal transmission network. However, the projects are in initial phases only due to lack of accord between the entities and absence of an acquis-compliant regulatory framework.

    For the interconnection point between Serbia and Bosnia and Herzegovina, negotiations on an interconnection agreement have not started yet.

  • Third Party Access

    Third Party Access

    Bosnia and Herzegovina is not compliant with the third party access provisions of the gas acquis on many accounts.

    The legislation of Federation of Bosnia and Herzegovina envisages negotiated access based on decisions of the Ministry in charge of energy. Gas transmission and distribution tariffs in the Federation were never adopted, published or applied. There is also no regulatory authority with the necessary competences in place.

    In Republika Srpska, the Law on Gas requires that the transmission tariff methodology, aligned with the Third Package principles, is adopted by the entity regulator, which also sets the tariffs.

    At present, the tariffs are applied for a spur of the transmission pipeline Karakaj – Zvornik, whereas the entity regulator is finalising the tariff setting procedure for the main pipeline, Sepak – Karakaj.

    Republika Srpska transposed the relevant provisions on capacity allocation, transparency and congestion management from the Third Package. At present, the transmission network code of Gas Promet provides for allocation of both long- and short-term capacity on a firm and interruptible basis. Gas Promet partly publishes the information required by the transparency rules.

    In practice, no third party access is granted to market participants other than the incumbent suppliers on any of the transmission networks.

    Republika Srpska’s Law on Gas defined third party access services of their transmission system operators. The exemption procedures are compliant with the Third Energy Package.

    In the Federation, a third party access exemption procedure is not compliant with the gas acquis – the exemption decision would be issued by the responsible Ministry without involving any regulatory authority or the Energy Community.

  • Wholesale market

    Wholesale market

    The gas market of Bosnia and Herzegovina is illiquid. Bosnia and Herzegovina’ s market is divided into two separate entity markets, which are both foreclosed. The domestic incumbents BH Gas and Energoinvest are parties to an import contract with Gazprom, which is renewed annually. Neither an organized exchange nor any other trading platform (e.g. virtual trading point or balancing platform) is in place.

    Deregulated segments of the market do not exist in the Federation.

    Federation of Bosnia and Herzegovina did not transpose any balancing provisions of Regulation (EC) 715/2009. In Republika Srpska, Gas Promet performs balancing under a Rulebook on the Operation of Natural Gas Transmission, but the balancing rules stipulated therein are not market based and thus not compliant.

  • Retail market

    Retail market

    Customers in Federation of Bosnia and Herzegovina are still captive, which is a serious breach of the Treaty. The eligibility provisions, stipulated by a government decree, define the eligibility status on the basis of consumption levels or limit it to customers that use gas for generation of electricity.

    Republika Srpska, on the other hand, correctly transposed the eligibility criteria. All natural gas consumers in Federation of Bosnia and Herzegovina are supplied by their respective incumbent at regulated prices. In Republika Srpska, there are different suppliers, and regulated prices remain only for household customers.

    Bosnia and Herzegovina has not transposed provisions related to customer protection and vulnerable customers as required by Directive 2009/73/EC.

    The existing legislation of Federation of Bosnia and Herzegovina introduces certain elements of the socially vulnerable status of customers by defining protected customers. It imposes obligations for the supplier of tariff customers as a manner of customer protection, which is not compliant with the acquis.

    Republika Srpska transposed the customer protection provisions by the Law on Gas.

    Neither entity performed any competitive procedures when determining the suppliers of last resort i.e the suppliers with public service obligations, though Republika Srpska’s Law requires such a procedure.

    Republika Srpska sets security of supply standards, whereas they are missing in Federation of Bosnia and Herzegovina.

  • Interconnectivity

    Interconnectivity

    Bosnia and Herzegovina is not compliant with the gas acquis on balancing. Federation of Bosnia and Herzegovina did not transpose any balancing provisions of Regulation (EC) 715/2009. In Republika Srpska, Gas Promet performs balancing under a Rulebook on the Operation of Natural Gas Transmission, but the balancing rules stipulated therein are not market based and thus not compliant.