ENERGY COMMUNITY OF SOUTH EAST EUROPE – ECSEE APL3-BIH Key Dates: Approved : June 16, 2006 Effective: April 13, 2007; October 2008 (delay of 27 months) Closing: December 31, 2010 (request received for extension by 18 months until June 2012) Financing in million US Dollars*: Financier Financing Disbursed Undisbursed IDA Credit 36.0 9.30 28.64 Government of BiH Co-financers (EBRD, EIB, KfW) 250.0 Total Project Cost 286.0 Note: Disbursements may differ from financing due to exchange rate fluctuations at the time of disbursement. The countries of South East Europe, including BH, the European Commission, bilaterals such as USAID and CIDA, and IFIs are cooperating to develop a regional energy market – the Energy Community of South East Europe (ECSEE, now called the „Energy Community‟) – and integrate it into the internal energy market of the European Union. Project Objective: This project facilitates BH‟s participation in the regional energy market through investments to improve dam safety; reduce adverse environmental impacts at thermal power stations; replace ageing existing facilities and equipment at hydro-power and thermal power stations; and rehabilitate distribution systems. The Project has maintained electricity generation in BH at or above base levels in corresponding hydrological conditions and assuming the avoidance of significant shutdowns of equipment not covered by the project. Environmental compliance has improved at Kakanj, and works are underway in Tuzla, Ugljevik, and Gacko Thermal Power Plants. Work is underway to improve dam safety at Grabovica, Salakovac, Jablanica, Rama, Trebinje II, Visegrad, and Bocac hydropower plants. A previous project (Power III) started a pilot project for implementation of Financial Management Information System, which has since been scaled up throughout the enterprise by EPHZHB, and the other two power utilities (EPBH and EPRS) are also scaling it up. This system would help improve management control, governance improvement, transparency in power trade and accounting, and help better commercial integration of BH power system with the regional energy market. Results achieved: After initial delays in implementation, the project is beginning to make progress. Some of the achieved results are:  Generation and export of power in 2009 has reached record levels and EPRS and EPBiH have earned record profits in spite of lower prices in the regional electricity market. However, due to the financial crisis the demand and prices of traded electricity in the region have further declined in 2010, and it would be difficult for the EPs to maintain such high levels of profitability.  Environmental compliance in TPP Kakanj improved. A new filter to control emissions from TPP Kakanj has been installed. Key Partners: BH Ministry of Foreign Trade and Economic Relations; Ministries of Energy of Federation BH and Republika Srpska; EPBiH (Elektroprivreda of Bosnia and Herzegovina), EPHZHB (Elektroprivreda of the Croatian Community of Herzeg- Bosnia) and EPRS (Elektroprivreda of Republika Srpska). Key Development Partners: The European Union supports power sector reform and restructuring under its technical assistance operations in the region, through its Phase program, in large part co-financed with EIB, EBRD, and KfW.