The leaders of Serbia and Bosnia’s Republika Srpska are considering a merger of their power systems for purely political reasons but the move could be a recipe for economic success, analysts said.
Politicians from the two sides met on Thursday and said they had given the power companies “a political incentive to consider the possibility of integrating their systems.” There is already cooperation in the telecommunications and financial sector.
The autonomous Serb half of Bosnia has always been close to Serbia, which supported it in the 1992-95 war between Bosnia’s Serbs, Muslims and Croats. Its economic ties with Bosnia’s other half, the Muslim-Croat federation, are minimal.
“This announcement was made for the sake of politics but the integration of the two systems could be very beneficial,” said Milan Kovacevic, a Belgrade-based consultant.
“Serbia has more thermal power plants while Bosnia has more hydro power plants. Together there would be a perfect balance.” A Serbian government source said the deal was politically motivated in the context of closer ties between the ethnic cousins across the border. But it made sense for them economically as well.
“The River Drina, which has great potential for hydro power, is on the border, and any project would need to be built together anyway,” the source said on condition of anonymity. He said that Serbia, which has a power deficit in the winter, could get power from Republika Srpska, which has a big surplus.
“Once the two systems are integrated, we would be able to buy the electricity directly from Republika Srpska, without a middleman, so it would be cheaper,” Serbia’s Energy Minister Aleksandar Popovic told B92 television.
Analysts added it would be especially beneficial if the two state-controlled power firms, Serbia’s EPS and the Republic’s Elektroprivreda RS, built new production facilities together. “The two power companies have very small capacities so any kind of integration would be good, especially if it expands to other countries such as Croatia,” said Dusko Jaksic, director of the Banja Luka Institute of Economics in Republika Srpska.
Strength in Unity
A merger would bring more benefits because currently neither party can afford expensive energy projects. ”But together they can go to a third party for financing,” Jaksic said.
Serbia has kept its power sector closed and has no plans to sell EPS. The Serb Republic has privatised 20 percent of its power firm, is building a 1.4 billion euro thermal plant with CEZ and has given concessions for several small hydroelectric plants.The cooperation between Serbia and the Serb Republic could stoke internal tensions in Bosnia at a critical time.
The Croat chairman of Bosnia’s tripartite presidency has already said he would ask the country’s powerful peace envoy to examine the deal and rule whether it is legal.
Svetlana Cenic, an independent analyst based in Banja Luka said the deal was timed with politics in mind.
”The Serbs have the issue in Kosovo, and in Bosnia we are facing problems with the constitution and police reform,” Cenic said. ”The emphasis on cooperation means each side backs the political stance of the other, “we are stronger together’.” Serbia’s breakaway Kosovo province demands independence and could seek recognition by several Western countries by the end of the year.
The Bosnian Serbs are also fighting to preserve the rights of their autonomous entity against the wishes of the European Union, which wants Bosnia’s two halves to come together as part of reconciliation and to make the path to EU entry simpler.
“Serb officials always come here in times of crisis or in election time,” Cenic added, ”but it’s a question whether the deals ever come through.” The test of their commitment comes as early as next month, when the two sides are to decide on the joint construction of a hydroelectric plant with an annual capacity of 400 million kWh.
(Reuters)