FROM THE CABINET OF STAŠA KOŠARAC'S How NOSBIH became a party platform for the million-dollar electricity trade

With the political positioning of Nemanja Pandurević, the former head of the cabinet of SNSD minister Staša Košarac, to the position of director of the key energy institution NOS BIH, space has been opened for the launch of an electricity trading platform called “Virtualna elektrana” (Virtual Power Plant). However, the absence of legal regulations, as well as technical capacities, could result in incalculable financial consequences for NOSBIH and the energy system, writes Tačno.net.

The practice of politicization of the energy sector, as well as the partisan management of public companies in this sector, did not bypass the state company NOSBIH, that is, the Independent Transmission System Operator BIH.

With a total budget of 9.5 million KM as well as approximately 60 million KM for a balanced market, the company with the primary goal of providing auxiliary services, due to the newly established mechanism for international electricity trade, represents a crucial energy company in Bosnia and Herzegovina.

In this context, the process of political election of the general director of this company should be observed. Nemanja Pandurević, who until recently was absolutely unknown in the energy circles of Bosnia and Herzegovina, was appointed to this position from the position of Chief of Cabinet of Staša Košarac, SNSD’s Minister of Foreign Trade and Economic Relations.

In the available biography, the current first man of NOS BIH, in addition to the position of head of the cabinet, also held positions in the Institute for Textbooks and Teaching Aids of Istočno Sarajevo, as well as in the Ministry of Human Rights and Refugees of BIH.

As a member of the Service Commission for Joint Affairs of the BIH Institution, Pandurević was involved in the affair of the purchase of real estate from the company “Građenje” Istočno Sarajevo worth two million KM in violation of the Law on Public Procurement, which ultimately resulted in the arrest of the president of this commission, Dragan Šojić.

The lack of experience and references for the position of the first man of NOSBIH in the case of Nemanja Pandurević was replaced by the support of the SNSD, but the party’s choice of personnel in the company, which should nominally be “independent”, is not limited to the position of general director.

Executive director of NOSBIH Ana Marić was appointed by the HDZ, and she came to this position with relevant experience gained as director of a Pension Home in Zenica. In addition to Marić, another member of the administration with support for the SDA, Muhamed Mujakić, in addition to this function, also holds the position of a member of the Independent Committee of the BiH Parliamentary Assembly for the election of police bodies at the BiH level.

Officially, the appointments could not have been made without the Board of Directors chaired by Assistant Professor of the Faculty of Traffic and Communications Ahmed Ahmić. Ahmić, as an SBB employee, is one of the members of the Supervisory Board of GRAS Sarajevo against whom a criminal complaint was filed for irregularities in the work of this public company.

The President of the Management Board, Ahmed Ahmić, was not in the mood to talk. He pointed out that during the election of Nemanja Pandurević, the legal procedure was followed.

“Everything that was done was done according to procedures. Mr Pandurević has the qualifications to perform this position, he is a proven manager and was the best candidate.”

Virtual Power Plants of Nemanja Pandurević

Portal Tačno.net turned to the Administration of NOSBIH with a request to provide us with competition materials that include documentation of the committee’s work, documentation of interviews with candidates and a ranking list for the election of the general director.

This company did not comply with our request, justifying the procedure with the lack of public interest in the publication of this documentation, as well as the fact that we did not participate in the competition for the election of the general director.

According to Tačno.net portal sources, the political appointment of Nemanja Pandurević to the position of director of NOSBIH was aimed at introducing a system of virtual power plants with the aim of further extending EFT, other traders and small producers.

“It was known months in advance that Nemanja Pandurević, as a member of SNSD, would be elected to the position of director of NOS. Given the political agreement, the Management Board had no choice but to comply with this decision in a non-transparent manner, violating the provisions of the law and regulations. This choice of the NOS administration was made for the reason that the system of virtual power plants should be introduced as soon as possible with the aim of further extending EFT and other traders and “small” producers, the introduction of which was opposed by Milodrag Košarac as the director of NOS, because this is a system for which there is no technical readiness and which is extremely uncertain and debatable from the point of view of legislation.”

Milodrag Košarac, the former director of NOS BIH, did not want to talk about this topic.

From the perspective of European regulations, virtual power plants are an innovative concept that aims to create a system that will enable users to sell surplus electricity when they are not using it. In this way, the need for energy from production is reduced, and users, often several smaller users connected in one cluster, can reduce their own costs. Specifically, by networking a 5 MW system, a 100 MW system is formed, which can be managed more easily from one place, that is, a “virtual power plant”.

NOSBIH’s system, which is colloquially called virtual power plant and which was established immediately after the appointment of Nemanja Pandurević, has no points of contact with EU legislation, nor is it possible to introduce such a system due to the absence of legal regulations.

The system that NOS BIH established after the departure of Milodrag Košarac from the position of general director enabled trading through balance responsible parties for producers connected to the 35kV voltage level. With this system, it is also possible for producers who only have a virtual power plant to become the balance responsible party and thus start trading electricity.

Considering the market prices of electricity, which have never been higher, this idea of a trade model has its own potential, however, the system implemented by NOSBIH did not pass the test stages as well as the analysis of possibilities.

A crucial problem is the fact that NOS BIH does not have the technical capabilities to directly measure the power injected into the system, given that it has no jurisdiction over the network below 110 kV, as well as the fact that the calculation of the withdrawal of secondary and tertiary reserves of electricity on the market of balance responsible parties is calculated only on a monthly basis.

The criterion for signing the contract: Criminal report for fraud in business

The Administration of NOSBIH denies technical deficiencies related to measurement. As they state in their written response, only power plants that meet the strict technical requirements for collecting the necessary data in accordance with the instructions of NOSBIH, that is, power plants for which the balance responsible party has submitted certificates from competent operators of distribution systems on the injection or taking over of electricity, can enter the system of virtual power plants in 15-minute intervals.

However, it was precisely the business of the balance responsible parties, that is, the company LE Trading BH, owned by Svetislav Bulatović and director Jovan Dević, with NOSBIH that resulted in a criminal complaint for business fraud, which the former management of BH operators led by Milodrag Košarc submitted to the competent prosecution.

According to the report, LE Trading BH delivered false daily schedules to the BH operator with incorrect data on purchased and sold energy. Considering the fact that the control system in NOSBIH is designed with calculation on a monthly basis, it was determined that in July 2021, in this way, LE Trading BH created an “imbalance” in the amount of 3.4 million KM. Additional checks established that this practice continued in August 2021.

After the liquidation of LE Trading BH, NOSBIH could not collect its claims. At this moment, according to information from this state-owned enterprise, the total claims against this company are 2.9 million KM, which, given that LE Trading has no collateral, will not be collected.

The criminal complaint against Jovan Dević was not an obstacle for the new general director of NOS, Nemanja Pandurević, to sign an agreement on Balanced Responsibility in June of this year with the company Renewable energy solution BH, of which Dević is a co-owner, enabling this company to trade electricity through the system of virtual power plants.

NOSBIH does not see anything controversial in this data. As they informed us, “The Board of Directors has been informed in detail and has discussed on several occasions the claims, that is, the debt to the legal entity LE Trading. LE trading is no longer in a contractual relationship with NOSBIH. NOSBIH submitted a criminal complaint to the competent prosecutor’s office against the legal entity LE Trading and against the authorized person in that legal entity, Jovan Dević, who is one of the founders of the company Renewable energy solutions BH.”

Jovan Dević, the current co-owner of the company Renewable energy solutions BH, pointed out that he is not aware of the criminal complaint and for this reason, he cannot comment on allegations of fraud in business with NOSBIH. As he emphasizes the system of virtual power plants in which his new company participates, “it is not an ideal solution, but it seems that there was no other option at this moment. For now, things are functioning as best as they can according to the current technical possibilities.”

Somewhere far away exist a SERC

Prominent members of the advisory board of this company, Ilija Kožulj, Nedžad Branković, Edhem Bičakčić and others, were informed about the developments in NOSBIH, the election of the general director, disputed claims, the system of virtual power plants as well as the signing of contracts with companies whose ownership structures have already damaged this company.

Of course, the State Regulatory Commission for Electricity, SERC, is fully aware of the developments in NOSBIH, given that this company is 100 per cent regulated by SERC.

When asked by the Tačno.net portal about their consent for the establishment of a system of virtual power plants within NOSBIH, the state regulator pointed out that their consent is not required.

“The State Regulatory Commission for Electricity (SERC) points out that, in accordance with current regulations, SERC’s consent is not required for the establishment of a model of access of “virtual power plants” to the electricity market.”

As they point out, the establishment of a system of virtual power plants is an extremely complex process that requires the participation of a large number of components of the power system, and representatives of SERK participated in a series of meetings that preceded the establishment of this temporary model.

“Namely, the access model of power plants connected to the distribution network in Bosnia and Herzegovina: nominal voltages up to 35 kV to the electricity market was formed within the framework of activities in which all relevant entities involved in the operation of the electricity market in Bosnia and Herzegovina jointly participated, namely in its different segments: wholesale, retail and balance market. Therefore, the three regulatory commissions in Bosnia and Herzegovina (SERC, FERC and RERS) participated in the formation of the mentioned model.

SERC’s response on the unnecessary consent for the establishment of the Virtual Power Plant system is in conflict with the Law on SERC, more specifically Article 5.3. paragraph 2, which clearly specifies that everything developed by NOSBIH must be submitted to SERC for inspection and approval.

The reason for the tacit approval of this model of functioning of virtual power plants by SERC, according to the opinion of several sources of the Tačno.net portal, lies in the pressures on the board members of this state regulator.

“The SERC, at least according to the inspection of their web pages, has not expressed itself in any way regarding this system, which speaks in favour of the fact that the system was introduced under the pressure of individual members of the SERC in cooperation with traders and small producers, and with the support of the new management of NOS. The rules and practice confirm the fact that such a system of virtual power plants could not be introduced by the decision of the director of NOS without the approval of SERC, because SERC is competent for approval. It is obvious that this was also about premeditated actions in SERC with the aim of favouring EFT, first and foremost, and consequently also other market participants such as HIFA, FEAL, VIBAR.”

We remind you that SERC, by not determining the network fee costs for electricity producers, enabled the private companies EFT Stanari and FEAL Široki Brijeg to use the energy infrastructure of Bosnia and Herzegovina without any financial compensation.

We tried to talk to the general director of NOSBIH, Nemanja Pandurević, about the electricity market through the system of virtual power plants, where almost 50 MW of electricity is traded at the moment.

He did not respond to our invitation for an interview, given that as we were informed by NOSBIH, Pandurević does not make statements to the media.

The consequences of the politicization of the BIH energy system, the high level of corruption, as well as the positioning of unprofessional staff in management positions within the state-owned companies of this system are most visible in the example of the functioning of the Operator for Renewable Energy Sources and the directorship of Boriša Misirača.

At this moment, it remains to be seen in which direction NOSBIH will go under the leadership of Nemanja Pandurević.

In the continuation of the Tačno.net series on energy, we bring an article about the reasons why Bosnia and Herzegovina still does not have an established electricity exchange.