CONTENTS GENERAL MANAGER S REPORT 5 HUMAN RESOURCES 9 LEGAL STATUS AND ORGANIZATION OF COMPANY 11 COMPANY PERFORMANCE 15 POWER GENERATION DIVISION 19

Transcription

1 2008 ANNUAL REPORT

2 CONTENTS GENERAL MANAGER S REPORT 5 HUMAN RESOURCES 9 LEGAL STATUS AND ORGANIZATION OF COMPANY 11 COMPANY PERFORMANCE 15 POWER GENERATION DIVISION 19 HPP RAMA 20 HPP MOSTAR 21 HPP PEĆ MLINI 22 PSPP ČAPLJINA 23 HPP JAJCE I 24 HPP JAJCE II 25 HPP MOSTARSKO BLATO UNDER CONSTRUCTION 26 DEVELOPMENT PROJECTS 33 POWER DISTRIBUTION DIVISION 37 DISTRIBUTION FACILITIES IN POWER SUPPLY DIVISION 41 MANAGEMENT BOARD S EVALUATION OF COMPANY PERFORMANCE ANNUAL REPORT 3

3 GENERAL MANAGER S REPORT Elektroprivreda Hrvatske zajednice Herceg Bosne, d.d. Mostar, a public company for power generation, distribution and supply was founded on August 28, 1992 and since it has operated in 6 cantons in the Federation of Bosnia and Herzegovina. It is one of three power companies in Bosnia and Herzegovina and since April, 2004 it has been a joint stock company. The stock capital of the Company consists of 10% private capital and 90% state capital. The Company operates six hydro power plants ( Rama, Mostar, Jajce I, Jajce II, Peć Mlini and Čapljina) with the total capacity of 792 MW. The total power generation in 2008 was 1355,64 GWh. The total length of the distribution network is 11,131 km. On December 31, 2008, EP HZ HB supplied 183,706 customers, including Aluminij d.d. Mostar company as the biggest customer in Bosnia and Herzegovina, and had 1729 employees. In 2008, in spite of many problems and the business environment burdened with evident consequences of the economic crisis, the Company operated at a gross profit of BAM 7,333,131. The following contributed to good operating results: proper power system control, orientation to loss minimization and collection rate increase, conclusion of flexible contracts with customers and suppliers of electricity with risk sharing, good business relations with customers, control of operating costs and good human resources management. The application of new tariffs according to the FERC s decision on tariffs for non-eligible (tariff) customers and the planned reduction of delivery to the 100 kv and higher level customers also had a positive influence on the Company performance. As the strategic objective of the Company is construction of new generation facilities, the year 2008 was marked by continuation of the work on construction of the HPP Mostarsko Blato. Installation of the mechanical and electrical equipment (turbines-generators) and other equipment started in the already constructed facilities. Preparation of the design and tender documents continued for the projects approved through the POWER 4 program for the HPP Rama and PSPP Čapljina. For better efficiency, minor repair work and other activities were carried out in these plants and in the HPPs Jajce I and Jajce II. For the projects of use of hydro energy, preparation of the feasibility study started and the research work was carried out for the small hydro power plants Kravice, Stubica, Dubrava and Luke. The pre-feasibility study was prepared for the HPP Han Skela and the hydro power plants on the Ugar River. For the PSPP Vrilo, preparation of the feasibility study started and the tender documents for the research work were prepared. For the projects of use of wind energy, we started activities on preparation of a ANNUAL REPORT 2008 ANNUAL REPORT 5

4 comprehensive environmental and social impact assessment and of the general design for the 20/110 kv substations for the wind farms Borova Glava, Mesihovina and Velika Vlajna. The activities on issuing the building permits and solving the problem of property-rights relations were intensified. We carried out the internal review of the report on the detailed geological research in the Kongora Lignite Deposit and started activities for preparation of the study for recognition of the reserves by the competent cantonal ministry. Regular maintenance of the distribution network and facilities, and continuous investment of our own and credit funds in the distribution network improved the quality of electricity supply. The feasibility study for establishing the modern SCADA/DMS system of operation in the Power Distribution Division was prepared since we try to bring the distribution network and its operation as well as the supply quality to the level as required by the EU Directive. Supply to all customers was safe and reliable and establishment and implementation of the new information systems increased the collection rate. For further adjustment to the requirements of the modern business operations, all necessary preparations for production of the Financial Management Information System (FMIS) were made. The system will significantly modernize the financial management of the Company as a whole as well as of its organizational units. By implementation of this project, JP Elektroprivreda HZHB will be the first power company in the region to improve its business operations by integrating the processes of purchasing, selling, materials management, finance, controlling and fixed assets in a single, transparent and unified system. For permanent improvement of the control of all business processes in the Company, we continued the activities on introducing the quality control system according to ISO 9001:2008 as well as on investment in human resources of the Company through awarding scholarships, employment and professional improvement. Mato-Matan Žarić, B.Sc. (El. Eng.) General Manager PSPP Čapljina - reservoir ANNUAL REPORT 2008 ANNUAL REPORT 7

5 HUMAN RESOURCES SHAREHOLDERS' ASSEMBLY SUPERVISORY BOARD EXECUTIVE SECRETARY AUDIT BOARD INTERNAL AUDIT DEPARTMENT Goods Procurement Unit Electricity Planning and Analysis Unit Procurement Department Works and Services Procurement Unit Trade Department Electricity Billing Unit Project Implementation Unit Implementation Unit Electricity Trade Unit DIRECTOR'S OFFICE COMPANY'S DIVISION Advisers NERETVA River Basin Unit Education Department Education Unit Metering Department Unit for Relations with Regulatory Commissions Metering Unit Public Relations Department POWER GENERATION DIVISION Generation Control Center VRBAS River Basin Unit TECHNICAL DEPARTMENT DEVELOPMENT DEPARTMENT ECONOMIC AND FINANCIAL AFFAIRS DEPARTMENT LEGAL, PERSONNEL AND GENERAL AFFAIRS DEPARTMENT BIS DEPARTMENT Sections HPP RAMA, Prozor HPP MOSTAR, Mostar HPP PEĆ MLINI, Grude HPP MOSTARSKO BLATO under Construction, Mostar Autonomous Section PSPP ČAPLJINA, Čapljina TECHNICAL DEPARTMENT DEVELOPMENT DEPARTMENT ECONOMIC AND FINANCIAL AFFAIRS DEPARTMENT LEGAL, PERSONEL AND GENERAL AFFAIRS DEPARTMENT BIS DEPARTMENT Sections HPP JAJCE I HPP JAJCE II EXECUTIVE DIRECTOR OF FINANCIAL AFFAIRS AND ACCOUNTING DIVISION FINANCIAL AFFAIRS AND ACCOUNTING DIVISION Planning and Analysis Unit Accounting Unit Financial Affairs Unit EXECUTIVE DIRECTOR OF LEGAL, PERSONNEL AND GENERAL AFFAIRS DIVISION LEGAL, PERSONNEL AND GENERAL AFFAIRS DIVISION DIRECTOR'S OFFICE Distribution Area Unit SOUTH Legal Unit Personnel Unit General Affairs Unit Translation Unit POWER DISTRIBUTION DIVISION TECHNICAL DEPARTMENT DEVELOPMENT DEPARTMENT ECONOMIC AND FINANCIAL AFFAIRS DEPARTMENT LEGAL, PERSONNEL AND GENERAL AFFAIRS DEPARTMENT BIS DEPARTMENT CONTROL AND METERING DEPARTMENT HNC Sections Mostar Rama Doljani Čitluk Čapljina Neum Ravno Stolac WHC Sections Grude Š. Brijeg Posušje Ljubuški HBC Sections Livno Drvar Grahovo Glamoč Tomislavgrad Kupres TECHNICAL DEPARTMENT DEVELOPMENT DEPARTMENT ECONOMIC AND FINANCIAL AFFAIRS DEPARTMENT LEGAL, PERSONNEL AND GENERAL AFFAIRS DEPARTMENT BIS DEPARTMENT CONTROL AND METERING DEPARTMENT MBC Sections Novi Travnik Nova Bila Kiseljak Vareš Usora Busovača Uskoplje Kreševo Žepče Dobretići Vitez Jajce Fojnica Novi Šeher Distribution Area Unit CENTER GENERAL MANAGER Distribution Area Unit NORTH EXECUTIVE DIRECTOR OF DEVELOPMENT DIVISION DEVELOPMENT DIVISION Power Facilities Development Department IT and Telecommunications Department Restructuring Department Standards and Environmental Protection Department TECHNICAL DEPARTMENT DEVELOPMENT DEPARTMENT ECONOMICAND FINANCIALAFFAIRS DEPARTMENT LEGAL, PERSONNEL AND GENERAL AFFAIRS DEPARTMENT BIS DEPARTMENT CONTROL AND METERING DEPARTMENT PC Sections Orašje Domaljevac Odžak Energy Sources Development Unit Power Networks Development Unit IT Unit Telecommunications Unit Standards Unit Environmental Protection Unit MANAGEMENT BOARD DIRECTOR'S OFFICE Distribution Area Unit SOUTH EXECUTIVE DIRECTOR OF POWER GENERATION DIVISION POWER GENERATION DIVISION POWER SUPPLY DIVISION Distribution Area Unit CENTER EXECUTIVE DIRECTOR OF POWER DISTRIBUTION DIVISION POWER DISTRIBUTION DIVISION Distribution Area Unit NORTH BILLING DEPARTMENT COLLECTION DEPARTMENT ECONOMICAFFAIRS DEPARTMENT LEGAL, PERSONNEL AND GENERAL AFFAIRS DEPARTMENT BIS DEPARTMENT METERING DEPARTMENT HNC Sections Mostar Rama Doljani Čitluk Čapljina Neum Ravno Stolac BILLING DEPARTMENT COLLECTION DEPARTMENT ECONOMICAFFAIRS DEPARTMENT LEGAL, PERSONNEL AND GENERAL AFFAIRS DEPARTMENT BIS DEPARTMENT METERING DEPARTMENT MBC Sections Novi Travnik Nova Bila Kiseljak Vareš WHC Sections Grude Š. Brijeg Posušje Ljubuški Usora Busovača Uskoplje Kreševo Žepče HBC Sections Livno Drvar Grahovo Glamoč Tomislavgrad Kupres Dobretići Vitez Jajce Fojnica Novi Šeher EXECUTIVE DIRECTOR OF POWER SUPPLY DIVISION POWER SUPPLY DIVISION BILLING DEPARTMENT COLLECTION DEPARTMENT ECONOMICAFFAIRS DEPARTMENT LEGAL, PERSONNEL AND GENERAL AFFAIRS DEPARTMENT BIS DEPARTMENT METERING DEPARTMENT PC Sections Orašje Domaljevac Odžak On December 31, 2008 JP Elektroprivreda HZ Herceg-Bosne d.d. Mostar had 1729 employees. In comparison with the end of 2007, the number of employees increased by 7.1% or 114 employees. At the end of 2008, out of the total number of employees in the Company s Division and other organizational units, 86 were trainees employed on a temporary basis. Comparing the qualification structure of the employees at the end of 2007 and of 2008, the number of employees having university or associate degrees increased. This will undoubtedly have a positive influence on carrying out of the given tasks. The Company has been continuously working on professional improvement referring its employees to workshops, training courses and other types of education and training, and awarding scholarships and employing trainees to have jobs in high demand. Employee Qualification Structure Educational lecel Employee Qualification Structure as of December 31, 2008 Total number of employees: 1729 D.Sc. - 1 M.Sc. - 2 Secondary school B.Sc Associate degree - 89 Skilled Semi-skilled - 33 Unskilled 70 Power Generation Division Power Distribution Division Power Supply Division Company s Division and other organizational units Total Dec.31, 2007 Dec.31, 2008 Dec.31, 2007 Dec.31, 2008 Dec.31, 2007 Dec.31, 2008 Dec.31, 2007 Dec.31, 2008 Dec.31, 2007 Dec.31, 2008 Index 11/10 Structure in % Unskilled ,4 4 Semi-skilled ,9 2 Skilled ,7 23 Second. school ,2 30 Highly-skilled ,1 17 Assoc. degree ,9 5 B.Sc ,1 19 M.Sc ,7 0 D.Sc ,0 0 Total , ANNUAL REPORT 2008 ANNUAL REPORT 9

6 Employee Age Structure Years of age 300 under over Dec.31, 2007 Power Generation Division Power Distribution Division Power Supply Division Company s Division and other organizational units Total Index 11/10 Dec.31, 2007 Dec.31, 2008 Dec.31, 2007 Dec.31, 2008 Dec.31, 2007 Dec.31, 2008 Dec.31, 2007 Dec.31, 2008 Dec.31, 2007 Dec.31, under , , , ,8 25 over ,1 4 Total ,1 100 JP Elektroprivreda HZ Herceg-Bosne d.d. Mostar has a good age structure. About 40% are employees under 40 and this enables comparatively easy adjustment to new working and operating conditions. Employee Experience Structure Dec.31, 2008 Dec.31, 2007 Dec.31, 2008 Dec.31, 2007 Dec.31, 2008 Dec.31, 2007 Dec.31, 2008 Power Generation Power Distribution Power Supply Company's Division and other organizational units Structure in % Legal Status and Organization of Company JP Elektroprivreda Hrvatske zajednice Herceg Bosne, a joint stock company, headquartered in Mostar, 106 A Mile Budaka (hereinafter called: Company) has had the legal continuity since November 17, 1992 when the public company Elektroprivreda Hrvatske zajednice Herceg Bosne Inc. was registered in the register of companies of the Higher Court in Mostar under No In July 1996, the Company was transformed into a limited liability company with the name Javno poduzeće Elektroprivreda Hrvatske zajednice Herceg Bosne d.o.o. Mostar. According to the valid Decision on Approval of Registration of Privatization in the Register of Companies made by the Agency for Privatization in BiH Federation No: /04 of January 15, 2004, 10% state capital of the Company was privatized. Pursuant to the provisions of the stated Decision of the Agency for Privatization in BiH Federation and provisions of Article 76 of the Law on Amendments of the Law on Economic Subjects (Official Gazette of BiH Federation No.29/03), the first meeting of the Shareholders Assembly of JP Elektroprivreda Hrvatske zajednice Herceg Bosne d.d. Mostar was held on March 8, There was made the decision on change of the Company organization and adjustment of its status to the Law on Economic Subjects and the stated decision of the Agency for Privatization in BiH Federation, the Company by-law was adopted and its bodies were appointed. Based on the stated documents, the Company was transformed into a joint stock company, its name was replaced by the name : Javno poduzeće Elektroprivreda Hrvatske zajednice Herceg Bosne dioničko društvo Mostar, and it adjusted the capital and activities. The Company activities are determined by the Company by-law. The Company bodies are appointed according to the Company by-law: the Shareholders Assembly, Supervisory Board, Audit Board, and Management Board consisting of the general manager and executive directors of the Company. The Company was registered in the Register of Companies of the Higher Court in Mostar (it is now under jurisdiction of the Municipal Court) under No as well as in the Register of the Securities Commission of BiH Federation based on the Commission Decision No: /04 of April21, On April 28, 2004, the Company concluded a contract with the Securities Agency of BiH Federation. The contract stipulates registration, keeping and updating of the data on the Company s securities. According to the standard classification of activities, the Company was, as a legal entity, registered under the activity subclass code: 40,100 Power generation and distribution. The Company identification number is VAT ID No is The Company stock capital amounting to BAM 736,166,000 is divided into 7,361,660 ordinary shares. The nominal value of a share is BAM The stock capital consists of: 10% private capital 90% state capital Activities of the Company are: power generation, distribution and supply, trading, representing and agency services in the domestic electricity market, manufacture of the power distribution and control equipment, construction and maintenance of hydro power plants, electrical installation and other installation work, civil engineering construction, maintenance of facilities in civil engineering and building construction, wholesale of machines for industry, handicraft sector and navigation, telecommunications, renting of own property, machines and equipment, consulting services for computer equipment (hardware), data processing, accounting, bookkee ANNUAL REPORT 2008 ANNUAL REPORT 11

7 Share value of issuer JPEMR and number of shares traded by month in 2008 Share value 200,00 180,00 160,00 140,00 120,00 100,00 80,00 60,00 40,00 20,00 0, ping and auditing business concerning taxes, architectural and engineering activities and technical consulting, research and experimental development in technical and technological sciences and other business activities. Foreign trade operations of the Company are: Electricity imports and exports Foreign trade transactions in free zones Imports of goods and providing of services within the scope of the registered activities Agency services and representing in goods and services trade and Imports of spare parts, raw materials and equipment for carrying out of activities Structure of Company Shareholders According to the Decision of the Agency for Privatization in BiH Federation on Approval of Privatization Program and Company Initial Balance Sheet, Jan. 3 Feb.1 March 3 April 1 May 5 June 6 June 30 July 31 Aug. 29 Sept. 26 Oct.31 Nov.20 Dec Number of traded shares 600 in 2002, the public subscription for shares in the second round was carried out and 10% total capital amounting to BAM 73,616,600 was sold. Based on the data from the Securities Agency, on May 27, 2008 (30 days before the sixth meeting of the Shareholders Assembly on June 26, 2008), there were 1,635 shareholders. The ownership structure was as follows: Structure of Company Shareholders Shareholders Number of shares % of share Residents physical persons ,4 Residents legal entities ,2 RESIDENTS ,6 Non- residents physical persons ,09 Non- residents legal entities ,31 NON-RESIDENTS ,40 TOTAL HPP Rama - dam The largest share among residents-legal entities is owned by the Government of BH Federation (6,626,306 shares or 90%) and the rest (735,354 shares or 10%) is owned by investment funds, residents and non-residents legal entities and physical persons. Stock Trade SASE On September 15, 2004, JP Elektroprivreda Hrvatske zajednice Herceg Bosne d.d. Mostar was included in SASE- the Sarajevo Stock Exchange under the issuer symbol JPEMR and the initial share value was BAM 50. During the period of 2.5 years, the JPEMR share value was increased by more than 3 times and on December 31, 2006, the stock exchange quotation was BAM 155. At the beginning of 2007, the share value was BAM and JPEMR was included in the MFTS trading plan. This is a continuous trading plan and it is characteristic of the shares with a certain level of liquidity, frequency and intensity of trading in the stock exchange. At the beginning of 2008, the share value was BAM 180. After that, its value decreased and on December 31, 2008 dropped to 55% of its nominal value (55%). The graph shows the share value of the issuer JPEMR and number of shares traded by month in Shares in Related Legal Entities JP Elektroprivreda Hrvatske zajednice Herceg Bosne d.d. Mostar has a share in the stock capital of the company Konstruktor-Neretva d.o.o. Čapljina amounting to BAM 859,665. During 2006, the Company stock capital was increased by investment of the member Konstruktor-inženjering d.d. Split. This resulted in the decrease of our Company share to 14%. In the stock capital of the company Elektrokontrol HZ H B Čapljina amounting to BAM 432,500.00, JP Elektroprivreda Hrvatske zajednice Herceg Bosne d.d. Mostar has a share of BAM 247,139 or 57.14% ANNUAL REPORT 2008 ANNUAL REPORT 13

8 COMPANY PERFORMANCE In the period January December 2008, JP Elektroprivreda HZ Herceg- Bosne d.d. Mostar operated at a gross profit of BAM 7,333,131. The application of new tariffs from January 1, 2008 according to the FERC s decision on tariffs for non-eligible (tariff) customers and the planned reduction of delivery to the 100 kv and higher level customers (Aluminij d.d. Mostar) had a positive influence on the Company performance. As Aluminij d.d. Mostar also purchased electricity from other suppliers (HEP, EP BiH, Aluminij as an eligible customer), an adverse effect of the difference between the purchase and selling price according to tariffs was eliminated. So, in 2008 we did not have the problem we had during the whole year Profit and Loss Account The total income amounted to BAM 339,296,892. It was 23% higher than the plan and 2% lower than in the previous year. The operating income (income from sales of electricity and services) amounted to BAM 319,254,145. It was 23% higher than the plan. The income from sales of electricity included the income from sales to tariff customers at the distribution voltage levels (63.3%) and at 110 KV and higher levels (28.9%), and the income from international trade electricity exports (7.8%). The income from sales of services amounted to BAM 21,481,691. It included the income from sales of services to third parties (BAM 2,883,481) and the income from sales of reserve power in the international market according to the concluded contracts (BAM 18,598,210). The income from sales of services to third parties included the income from: issue of power connection certificates, project reviews, maintenan ANNUAL REPORT 2008 ANNUAL REPORT 15

9 Profit and Loss Account Item Description Jan.-Dec Realization ce and reconstruction of the power network (Power Distribution Division), inspection of metering points, meter calibration, replacement of time switches, and cutting and reconnection of customers (Power Supply Division). The other income (BAM 19,449,456) included the income from: premium of life insurance of all employees of the Company from the insurance company Croatia osiguranje d.d. Ljubuški (BAM 12,382,251), donations Jan.-Dec Plan Jan.-Dec Realization 3 Plan Realization 5/3 5/4 1 Operating income ( ) Income from electricity sales ( ) Income from tariff customers at distribution voltage levels Income from other 35 kv customers Income from 110 kv and higher level customers and other non-tariff customers Income from electricity trade Income from sales of services Financial income Other income TOTAL INCOME ( 1+2+3) Operating expenses ( ) Costs of electricity purchases Operating expenses Depreciation costs Staff costs Financial expenses Other expenses TOTAL EXPENSES (5+6+7) Gross profit/loss (4-8) Index 5/3 Index 5/4 (BAM 3,380,088), compensations for damages from insurance companies (BAM 267,048), collection of written-off receivables (BAM 2,714,284) and the income from previous years (BAM 414,822). The total expenses amounted to BAM 331,963,761. They were 20% higher than the plan and 18% lower than in the previous year. The expenses were higher than the plan because we had to purchase 64% more electricity than we plannned (generation was lower than the plan due to unfavourable hydrological circumstances). The operating expenses amounted to BAM 316,974,634, financial expenses (interest and negative exchange rate differences) BAM 1,899,285 and other expenses BAM 13,089,842. The largest portion of other expenses included the bad and doubtful debts (BAM 8,395,301) written-off according to accounting policies as follows: for households - after one year and for other classes of customers - after three years. The remaining portion included penalties and compensations for damages (BAM 323,426), subsequently determined expenses from the previous years (BAM 3,431,750), shortages (BAM 761,257) and other expenses (BAM 178,108). The operating expenses (without depreciation costs, costs of electricity purchases and staff costs) were 10% lower than the plan and 8% lower than in the previous year. They were lower than the plan due to the reduced costs of raw materials and materials (76.1%), maintenance services (78.4), spare parts (85.7%), insurance of property and persons (58.2%), contributions, membership fees and other levies (94.8%), PTT services (90.5%), other staff costs (85.4%). The total expenses were 19.9% higher than the plan and 17% lower than in the previous year. The salary budget was 1% smaller than the plan. It was 28% bigger than in the previous year due to the increase according to the Collective Agreement signed between the Trade Union of Electricity Workers of BiH and the Government of FBiH. This Agreement stipulates the new payroll computation method based on the lowest net hourly rate of BAM 2.45 and average number of working hours of 174. This method was applied retroactively from January 1, On December 31, 2008, the total receivables were BAM 200,715,197. They were lower than on December 31, 2007 by 3% or by BAM 5.76 M since the electricity purchased by Elektroprivreda BiH in December 2007 Capital Structure as of December 31, 2008 Stock capital was paid in 2008 (BAM 7,949,757). Receivables from the tarrif customers at distribution voltage levels were lower than at the end of the previous year. They were reduced to the greatest extent (by BAM 4.8 M) in the Supply Area Unit SOUTH. Balance Sheet Retained earnings Accumulated losses Revaluation reserves On December 31, 2008, the Company assets value was BAM 1,181,281,837. It was 2.5% higher than on December 31, The value of the fixed assets (real property, facilities and equipment) was increased by 2.4% and of the current assets (raw material, material and spare part inventories) by 3.6% ANNUAL REPORT 2008 ANNUAL REPORT 17

10 Balance Sheet (in BAM) POWER GENERATION DIVISION Item DESCRIPTION As of Dec.31, 2007 As of Dec.31, 2008 Share (in %) Index 4/ I ASSETS 1. Fixed assets ,4 2. Current assets ,6 A TOTAL ASSETS (1+2) ,5 Contingent assets ,0 II LIABILlTIES 1. Capital ,8 2. Ling-term liabilities ( ) , Long-term financiai commitments , Long-term accruals and provisions ,9 3. Current liabilities ( ) , Short-term financiai commitments , Trade payables and other Iiabilities , Other current Iiabilities ,8 B TOTAL LIABILlTIES (1+2+3) ,5 Contingent liabilities ,0 The Power Generation Division is a part of JP Elektroprivreda HZ Herceg Bosne d.d. Mostar which core activity is power generation but auxiliary and system services are also provided. The total capacity of six hydro power plants (HPPs Rama, Mostar, Jajce I, Jajce II, Peć Mlini and PSPP Čapljina) is 792 MW.The HPP Mostarsko Blato (2x30 MW) with the planned annual output of 167 GWh is expected to be put into operation in the last quarter of The operating conditions in all hydro power plants are very good and they are included in the system of generation remote control from the Main Dispatch Centre of EP HZ HB in Mostar. Activities on the projects of power generation from renewable sources are in progress. This would provide additional MWs for the needs of EP HZ HB. In the total assets, a share of the fixed assets was 88% and of the current assets 12%. In the liabilities, a share of the capital was 78%, of the long-term liabilities 15% and of the current liabilities 7%. In the long-term liabilities, a share of the deferred income was 43% and of the long-term credits 57%. The capital consists of the stock capital amounting to BAM 736,166,001.00, revaluation reserves BAM 262,970,5224, retained earnings BAM 18,673,600 and accumulated losses BAM 92,162,950. HPP Mostar - dam ANNUAL REPORT 2008 ANNUAL REPORT 19

11 HPP RAMA HPP MOSTAR The hydro power plant Rama is the largest plant in the system of the hydro power plants on the Neretva river. It is located in Herzegovina- Neretva Canton. The power house is situated by the road Jablanica-Rama and the dam and reservoir in the very vicinity of the town of Prozor-Rama. It was put into operation in The hydro power plant Mostar is the last plant in the range of the plants constructed on the Neretva river and is located 3.73 km upstream of the city of Mostar in Herzegovina- Neretva Canton. It was put into operation in 1987 and again in 1997 after rehabilitation of the war damages. MAIN DATA Number of generating sets 2 Installed capacity 160 MW Plant type Diversion - storage MAIN DATA Number of generating sets 3 Installed capacity 72 MW Plant type Adjacent-to-dam - storage GENERATORS Type 3-phase synchronous S Manufacturer Končar Put into operation 1968 Nominal power 90 MVA GENERATORS Type 3-phase synchronous S Manufacturer Končar Put into operation 1987/1988 Nominal power 30 MVA TURBINES Type Francis Manufacturer Litostroj Installed capacity 80 MW TURBINES Type Kaplan K - 5 Manufacturer Litostroj Installed capacity 23.6 MW DAM and RESERVOIR Dam construction height 103 m Dam height 96 m Hydraulic height 89 m Crest length 230 m Headrace tunnel length 9536 m DAM and RESERVOIR Dam construction height 44 m Dam height 28 m Crest length m Crest elevation 81 m a.s.l. Headrace tunnel diameter 5 m ANNUAL REPORT 2008 ANNUAL REPORT 21

12 HPP PEĆ MLINI PSPP ČAPLJINA The hydro power plant Peć Mlini is located in the municipality of Grude in West Herzegovina Canton. It uses energy potential at a head of 107 m between the Imotski-Grude field-nuga reservoir and power house in the Petnik hill foot in Peć Mlini. It was put into operation in HPP Peć Mlini HPP Peć Mlini The pumped storage power plant is located on the lower Trebišnjica river in Herzegovina- Neretva Canton. It collects its catchment inflow water and the Trebišnjica water through the Popovo field. It was put into operation in MAIN DATA Number of generating sets 2 Installed capacity 30 MW Plant type Diversion - run-of-river MAIN DATA Number of generating sets 2 Installed capacity 440 MW Plant type Reversible - pumped storage GENERATORS Type 3-phase synchronous Manufacturer Končar Put into operation 2004 Nominal power 18 MVA GENERATORS Type 3-phase synchronous Manufacturer AEG Put into operation 1979 Nominal power 240 MVA TURBINES Type Francis K - 5 Manufacturer Litostroj Installed capacity MW TURBINES Type Francis Manufacturer Riva - Calzoni Installed capacity 210 MW DAM and RESERVOIR Upper reservoir level - maximum 252 m a.s.l. Upper reservoir level - minimum 249 m a.s.l. Nominal discharge 15 m 3 /sec Headrace tunnel length 1547 m Headrace tunnel diameter 3.6 m PSPP Čapljina DAM and RESERVOIR Upper reservoir level - maximum m a.s.l. Upper reservoir level - minimum 224 m a.s.l. Nominal discharge turbine mode 112 m 3 /sec Nominal discharge pumping mode 85 m 3 /sec ANNUAL REPORT 2008 ANNUAL REPORT 23

13 HPP JAJCE I HPP JAJCE II The hydro power plant Jajce I is located on the left bank of the Vrbas river by the road Jajce- Banjaluka in Middle Bosnia Canton. It is 7 km far from the town of Jajce. It collects the water of the Big Pliva lake which is situated at the height of 428 m asl. It was put into operation in The hydro power plant Jajce II was constructed on the Vrbas river 17 km downstream of the town of Jajce in Middle Bosnia Canton. It was put into operation in Number of generating sets 2 Number of generating sets 3 MAIN DATA Installed capacity 60 MW MAIN DATA Installed capacity 30 MW Plant type Diversion - run-of-river Plant type Diversion - run-of-river GENERATORS Type 3-phase synchronous Manufacturer Končar Put into operation 1957 Nominal power 36 MVA GENERATORS Type 3-phase synchronous Manufacturer Končar Put into operation 1954 Nominal power 12.5 MVA TURBINES Type Francis Manufacturer KMW Installed capacity 30 MW TURBINES Type Francis Manufacturer Voith + Litostroj Installed capacity 10 MW Minimum operating reservoir level m a.s.l. Minimum operating reservoir level m a.s.l. DAM and RESERVOIR Maximum operating reservoir level m a.s.l. Headrace tunnel length 5700 m DAM and RESERVOIR Maximum operating reservoir level m a.s.l. Headrace tunnel length 2880 m a.s.l. Headrace tunnel diameter 5.4 m Headrace tunnel diameter 5.5 m ANNUAL REPORT 2008 ANNUAL REPORT 25

14 HPP MOSTARSKO BLATO UNDER CONSTRUCTION The hydro power plant Mostarsko Blato is located south-west of Mostar and will use energy potential of the Lištica river at the head of 176 m between Mostarsko Blato and Mostarsko Field. Construction period: The hydro power plant Mostarsko Blato will be connected to the 110 kv Mostar 4 (Čule) Mostar 5 (Rodoč) transmission line. PREPARATION AND DELIVERY OF GENERAL AND FINAL DESIGNS FOR HPP MOSTARSKO BLATO The design team of Elektroprojekt prepared the general designs for the HPP Mostarsko Blato and in 2008, preparation of the final designs was in the final stage. CONSTRUCTION OF INTAKE STRUCTURE, HEADRACE TUNNEL, SURGE CHAMBER AND VALVE CHAMBER In 2008, we started the intensive work on construction of the intake structure, headrace tunnel, surge chamber and valve chamber. We also started installation of the trashrack in the intake structure and grouting of the reinforced concrete lining in the headrace tunnel. With this, construction of the headrace tunnel as a big and important facility will be completed. CONSTRUCTION OF PENSTOCK, POWER HOUSE, TAILRACE BASIN AND FLOOD CHANNEL The penstock supports and power house were constructed. This enabled installation of the mechanical and electrical equipment. Installation of the generating sets (turbines-generators) and other equipment started in the power house. In 2008, all preparations were made for construction of the tailrace basin and flood channel. MECHANICAL AND ELECTRICAL EQUIPMENT Most of the mechanical and electrical equipment was manufactured, factory tested, transported to the site and partially installed. We started installation of the generating sets 1 and 2 and other equipment ANNUAL REPORT 2008 ANNUAL REPORT 27

15 Power Generation in Hydro Power Plants in 2008 by Month (GWh) HPP Rama PSPP Čapljina HPP Mostar HPP Jajce I HPP Jajce II HPP Peć Mlini TOTAL January 56,37 14,09 25,78 19,72 15,45 7,58 139,00 February 60,48 8,25 16,76 13,77 11,43 4,86 115,54 March 13,03 14,19 26,51 23,63 16,97 11,60 105,93 April 16,45 5,33 35,02 30,55 19,44 13,85 120,65 May 24,10 0,00 21,79 23,32 17,27 7,20 93,67 June 75,93 0,44 14,88 17,36 12,81 2,84 124,26 July 55,85 0,90 9,52 10,89 9,11 0,94 87,20 August 58,43 1,16 8,06 7,95 6,89 0,24 82,73 September 77,35 2,36 12,00 7,16 6,34 0,03 105,24 October 68,72 3,58 19,35 8,66 7,58 0,05 107,95 November 35,05 17,80 22,68 13,05 9,51 3,81 101,89 December 15,54 47,33 37,88 33,15 19,59 18,09 171,59 TOTAL 557,31 115,42 250,25 209,21 152,38 71, ,64 POWER GENERATION IN HYDRO POWER PLANTS IN 2008 PER MONTHS 80 SHARE OF PLANTS IN TOTAL POWER GENERATION IN 2008 HPP Rama 5% 11% 15% HPP Mostar 42% 9% 18% HPP Jajce I HPP Jajce II Total Power Generation in 2007 and 2008(GWh) HPP Rama 467,03 557,31 PSPP Čapljina 111,24 115,42 HPP Mostar 193,33 250,25 HPP Jajce I 170,90 209,21 HPP Jajce II 141,79 152,38 HPP Peć Mlini 39,79 71,08 TOTAL 1124, , Power Generation from 2000 to 2008 (GWh) HPP Rama 653,80 722,90 455,00 570,00 674,98 729,26 864,64 467,03 557,31 PSPP Čapljina 121,65 283,18 117,00 162,00 327,20 317,59 331,68 111,24 115,42 20 HPP Mostar 181,13 197,34 199,00 200,00 257,10 239,02 242,47 193,33 250,25 10 HPP Jajce I 197,95 226,81 229,00 163,00 241,48 240,63 229,07 170,90 209,21 HPP Jajce II 152,63 170,31 173,00 137,00 161,00 173,65 161,70 141,79 152,38 0 January February March April May June July August September October November December HPP Peć Mlini 6,89 68,53 55,22 39,79 71,08 TOTAL 1307, , , , , , , , ,64 HPP Rama HPP Mostar HPP Jajce I HPP Jajce II ANNUAL REPORT 2008 ANNUAL REPORT 29

16 POWER GENERATION TREND FROM 2000 TO POWER GENERATION IN 2007 AND 2008 BY MONTH January February March April May June July August September October NovemberProsinac HPP Rama HPP Mostar HPP Jajce I HPP Jajce II POWER GENERATION TREND FROM 2000 TO 2008 HPP Rama PSPP Čapljina HPP Mostar HPP Jajce I HPP Jajce II HPP Peć Mlini TOTAL ,80 121,65 181,13 197,95 152, , ,90 283,18 197,34 226,81 170, , ,00 117,00 199,00 229,00 173, , ,00 162,00 200,00 163,00 137, , ,98 327,20 257,10 241,48 161,00 6, , ,26 317,59 239,02 240,63 173,65 68, ,69 POWER GENERATION TREND FROM 2000 TO ,64 331,68 242,47 229,07 161,70 55, , ,03 111,24 193,33 170,90 141,79 39, , ,31 115,42 250,25 209,21 152,38 71, , ANNUAL REPORT 2008 ANNUAL REPORT 31

17 DEVELOPMENT PROJECTS In order to have our own development program and meet the demands of our customers, we launched development projects having in mind the electricity demand up to Our development is based on: Use of wind energy Use of hydro energy Kongora lignite mine and thermal power plant In addition, the preparations are made for the project of use of solar energy and we have to consider the place and role of EP HZHB in the projects of gasification in this area. According to the strategic plan and program for BiH energy, the development projects of EP HZHB are included in the top-priority projects in BiH. Use of Wind Energy After the activities on research and development that started in 2004, three wind farm projects are ready for implementation: Borova Glava - Livno (26 wind turbines x 2 MW), Mesihovina - Tomislavgrad (22 x 2 MW) and Velika Vlajna - Mostar (16 x 2 MW). The foreseen annual output in these wind farms is 370 MWh. In 2008, we started preparation of the general design for the 20/110 kv substations for the wind farms Borova Glava, Mesihovina (Tomislavgrad Municipality) and Velika Vlajna. For these substations, the research work was carried out, research reports were prepared and preliminary design was prepared and reviewed. The activities on issuing of the building permits for the first three wind farms were intensified. Within the bilateral cooperation between the Federal Republic of Germany and BiH, the German Development Bank (KfW) indicated its willingness to finance construction of the wind farm Mesihovina with a possibility of extension of the cooperation to other projects. The Loan Agreement for construction of the wind farm Mesihovina was concluded between the Government of the Federal Republic of Germany and the Council of Ministers of BiH. The funds would be available in Before providing the credit funds for construction of the wind farm Mesihovina, KfW provided a grant for preparation of the feasibility study that confirmed a possibility of use of wind energy in three sites: Mesihovina, Borova Glava and Velika Vlajna. KfW accepted the study in October, The Development Department of EP HZHB gave the technical support for preparation of the study and reviewed it. We started the activities on preparation of a comprehensive environmental and social impact assessment also financed out of the grant funds provided by KfW. Similar arrangements were negotiated with other potential financiers and significant progress was made in the field of cooperation with some financial institutions (EIB, EBRD, WB). Use of Hydro Energy Elektroprivreda HZHB d.d. Mostar works on the projects of research and development of small, pumped storage and conventional hydro power plants in the Neretva, Tihaljina Mlade Trebižat (T-M-T), Lištica, Upper Cetina and Vrbas river basins. The total installed capacity of these plants will be about 213 MW and annual output about 546 GWh. The Development Department prepared the study Hydro Power Solutions in Neretva River Basin downstream of HPP Mostar and after that the Faculty of Civil Engineering of Mostar University prepared the pre-feasibility study for the HPP Skakala. In the T-M-T and Lištica river basins, the research work was carried out and the research reports were prepared for the small hydro power plants Kravice, Stubica, Dubrava, Luke and Fratarska. The studies of alternatives were prepared for the stated small hydro power plants in the T-M-T and Lištica river basins ANNUAL REPORT 2008 ANNUAL REPORT 33

18 In the Vrbas river basin, the study Hydro Power Plants on Ugar River for three plants: Ugar Ušće, Ivik and Vrletna Kosa was prepared and reviewed. For the HPP Bravnice (Han Skela) on the Vrbas river, the tender documents were prepared and the procedure for public procurement of the service of the design preparation was carried out. In the Upper Cetina river basin, the research program was prepared within the preparation of the feasibility study for the PSPP Vrilo. Based on this program, the Financing Agreement for the project implementation was signed between KfW and JP EP HZHB. The European Bank for Reconstruction and Development (EBRD) finances the study Strategic Environmental Assessment of Trebižat and Cetina River Basins to be prepared in accordance with the EU directives (Directive 2001/42/EC) and appropriate documents. The Draft Final Report was prepared and we started the activities for carrying out of public consultations. Kongora Lignite Mine and Thermal Power Plant Deposit. Preparations were started for the analysis of the level of exploration for coal in the rest of Herceg Bosnia Canton. GIS Project The official cadastral plans and maps M 1:2500 and 5000 were vectorized for the project of the PSPP Vrilo. The usufruct data base was made for the projects of the wind farms Mesihovina, Borova Glava and Velika Vlajna, and the small hydro power plants Kravice, Stubica, Dubrava, Luke and Fratarska. The 3 D models were created for making of complex geoanalyses, automatic calculation of surface and cubic volume within the given area, automatic profile generation etc. on the basis of the created network 3D models in the GIS tool environment. Table Installed capacity and annual output of existing and new generation facilities Map of existing and planned generation facilities of JP EPHZHB In the period , JP Elektroprivreda HZHB d.d. Mostar carried out the detailed geological research in the Kongora Lignite Deposit in Tomislavgrad. This research supplemented the previous research. In 2008, the following documents were prepared: Report on Research Drilling and Excavation, Study on Coal Quality and Study on Geomechanical and Laboratory Testing of Physical-Mechanical Features of Coal and Accompanyng Seams. Preparation of the Study on Kongora Lignite Deposit Classification, Categorization and Estimate of Reserves was started. The results of the geomechanical testing and hydrogeological research prove that this deposit is suitable for surface extraction with application of the latest technologies. The obtained results confirm the assumptions. In some important parameters (weighted lower heating value, total sulphure and total balance reserves) they are even better than the assumption. It enables continuation of preparation of the designs and studies for the Kongora Lignite Mine and Thermal Power Plant. We started preparation of the hydrogeological study for the Kongora Item Name 1. Wind farms 2. Hydro power plants out of which Pumped storage power plant Small hydro power plants 3. Thermal power plants 4. Renewable energy sources 5. Fossil fuels 7 Total Capacity Year Annual output MW GW MW GW MW GW MW 0 15,28 37,62 47,62 GW MW GW MW GW MW GW MW GW ANNUAL REPORT 2008 ANNUAL REPORT 35

19 Power Distribution Division Distribution Facilities 35/x kv SS 15 pcs. 10(20)/0.4 kv SS pcs. 35 kv overhead lines 278 km 10(20) kv overhead lines km 1 kv overhead lines km 35 kv underground lines 7 km 10(20) kv underground lines 544 km 1 kv underground lines 576 km In 2008, a share of the Power Distribution Division in the total investment of the Company was 35.5% The network and facilities are operated conventionally through five dispatch centers in the headquarters of the distribution areas units and sections. The modern SCADA/DMS system of operation is planned to be established soon.the feasibility study was prepared in In 2008, there were 8,346 power connection applications out of which 8,091 were approved. Telecommunications and Computer Network As late as 2005, establishment of the connection system through HT was completed. This enabled closing and connecting of the distribution business system. Using the established computer network, the work of users was organized and connection to Internet was made. Internet access is controlled through the ISA server and antivirus protection is ensured through the system. In 2008, the computer equipment was procured and development of the computer networks continued. We started preparation of the telecommunication infrastructure project of installation of optic cables between the 110/xkV substations and office buildings. This would enabled closing of the telecommunications system through OPGW cables. Metering in Power System At the points of electricity acceptance from TRANSCO, meters are installed by TRANSCO. At the 0.4 and 10 kv points of electricity acceptance between power companies, meters are installed by the Power Distribution Division in cooperation with the Power Supply Division. Meters are installed and electricity and power are metered in all points. Activities on installation of control meters started. This project is financed out of the EBRD credit funds and also includes construction of the distribution metering center in Mostar. This is a very important project because its implementation will make it possible for us to have exact data on losses in the MV network and locate losses in the LV network ANNUAL REPORT 2008 ANNUAL REPORT 37

20 DISTRIBUTION FACILITIES IN (10) line in Herzeg Bosnia Canton PDD Number of 110/10(20) kv substations Substations x/10(20) kv substations 10(20)0.4 kv substations 35 kv MV lines 10(20) kv MV lines 0.4 kv LV lines Number of 35/10(20) kv substations Installed power MVA Total number of substations Installed power KVA Length of overhead lines (km) Length of underground lines (km) Total length (km) Length of overhead lines (km) Lines Length of underground lines (km) Total length (km) Length of overhead lines (km) Length of underground lines (km) HNC TRANSCO WHC TRANSCO HBC TRANSCO MBC TRANSCO PC TRANSCO TOTAL Total length (km) SUBSTATIONS LINES DAU 35/10(20) kv substations 10(20)/0.4 kv substations 35 kv MV lines 10(20) kv MV lines 0.4 kv LV lines Number of substations Installed power MVA Number of substations Installed power KVA Length of overhead lines (km) Length of underground lines (km) Total length (km) Length of overhead lines (km) Length of underground lines (km) Total length (km) Length of overhead lines (km) Length of underground lines (km) 1 w DAU SOUTH DAU CENTER DAU NORTH TOTAL Total length (km) ANNUAL REPORT 2008 ANNUAL REPORT 39

21 Power Supply Division The organizational parts of the division are: 1. Executive Director s Office 2. Supply Area Unit SOUTH 3. Supply Area Unit CENTER 4. Supply Area Unit NORTH Supply area units consist of departments and sections carrying out the activity of power supply. The employees of the division are responsible for safe and reliable supply to customers as well as for electricity billing and collection. On December 31, 2008, there were 183,570 customers. Customers by supply area unit 9% 65% 26% Number of Customers by Class as of December 31, 2008: SAU SOUTH SAU CENTER SAU NORTH Class Number of customers 110 kv 3 35 kv 3 10 (20) kv 119 Households Other consumption Street lighting Total Accepted electricity by supply area unit 8% 70% 22% SAU SOUTH SAU CENTER SAU NORTH ANNUAL REPORT 2008 ANNUAL REPORT 41

22 Collection rate at distribution level: Supply Area Unit SOUTH 99,69 % Supply Area Unit CENTER 99,73 % Supply Area Unit NORTH 99,47 % Distribution network losses: Supply Area Unit SOUTH 18,34 % Supply Area Unit CENTER 18,37 % Supply Area Unit NORTH 10,26 % Structure of billed electricity (MWh) 11% 11% 2% 20% 53% Maximum (December 31, 2008 at 7 p.m.) and minimum (June 26, 2008 at 5 a.m.) daily consumption in MAX (MW) MIN (MW) Maximum and minimum hourly consumption by month in 2008 mjesec I II III IV V VI VII VIII IX X XI XII MAX (MW) MIN (MW) Number of suits brought for debt: Supply Area Unit SOUTH Supply Area Unit CENTER Supply Area Unit NORTH 101 Number of inspections of metering points and connections: Supply Area Unit SOUTH Supply Area Unit CENTER Supply Area Unit NORTH Households Other consumption 10 kv Ratio of electricity accepted by customers at distribution level and by other tariff customers 39% Other 35 kv customers Street lighting 35 kv Daily Load Diagram June 26, 2008 December 31, % 300 Tariff customers (distribution level) Other tariff customers ANNUAL REPORT 2008 ANNUAL REPORT 43

23 MANAGEMENT BOARD S EVALUATION OF COMPANY PERFORMANCE In 2008, the total power generation in the hydro power plants operated by our Company was GWh or 88.7% of the plan. Power generation in all hydro power plants except in the HPP Mostar was lower than the plan due to unfavourable hydrological circumstances. The total power consumption (2, GWh) was higher than the plan (107.4%). The losses at the distribution voltage levels of 15.62% were still higher than the plan (13.77%) but lower than in the previous year (16.63%). The collection rate was 97.83%. It was at the level of the plan (97%). Achievement of the planned collection rate had a positive influence on the Company liquidity. All liquidity ratios ratios of current liquidity, day-today liquidity, accelerated liquidity and financial stability were within the scope of the plan and better than in In the period January December 2008, the planned investment amounted to BAM 144,943,321 and realized investment BAM 72,591,576 or 50%. As a result of the good Company performance in 2008, the profitability ratios gross profit margin, ROA (return on assets), ROE (return on equity), ROI(return on investment), EBITDA (earnings before interest, taxes, depreciation and amortization) and EBIT (earnings before interest and taxes) were better than in the previous year. The investment indicators labour productivity and EPS (earnings per share) were better than in The economic indicators - coefficients of economy of all business activities, and operating and working factors were better than in 2007 and were at the level of reference values except the coefficient of economy of financing that was below the reference value since the financial expenses (interest on loans from the previous years) were higher than the financial income (return interest and positive exchange rate differences). After evaluation of the Company s performance in 2008, the Management Board set the following tasks to be carried out in the following period: Electricity loss minimization and collection rate increase through implementation of the project of remote reading and consumption control for theft prevention and proper control of the power distribution system Conclusion of flexible contracts with customers and suppliers of electricity with delivery risk sharing Cultivation of good business relations with all customers for joint planning of the future services Safe and reliable supply to customers at all voltage levels Control of operating expenses in all business activities Successful human resources management in the Company 245 kv switchgear of PSPP Čapljina ANNUAL REPORT 2008 ANNUAL REPORT 45

24 ANNUAL REPORT