ANNUAL REPORT 2010
JP ELEKTROPRIVREDA HZ HB d.d Mostar Mile Budaka 106a 88000 Mostar Bosnia and Herzegovina Tel.: +387 36 335 700 Fax: +387 36 335 777 ephzhb@ephzhb.ba www.ephzhb.ba
contents GENERAL MANAGER S REPORT...4 COMPANY PROFILE...6 Mission Vision Strategy QUALITY MANAGEMENT POLICY...8 2010 General Data ORGANIZATION CHART... 10 GOVERNING BODIES... 12 Shareholders Assembly Supervisory Board Audit Board Management Board BASIC LEGAL DATA... 14 Home Trade Activities of Company Foreign Trade Activities of Company Structure of Company Shareholders in 2010 Stock Trade SASE Shares in Related Legal Entities Human Resources COMPANY S PERFORMANCE... 19 Profit and Loss Account Balance Sheet Independent Auditors Report Map of Power System in BiH in 2010 POWER GENERATION DIVISION... 29 HPP Rama HPP Mostar HPP Peć Mlini PSPP Čapljina HPP Jajce I HPP Jajce II HPP Mostarsko Blato CONSTRUCTION OF GENERATING PLANTS... 41 PROJECT ACTIVITIES... 42 Wind Farms Hydro Power Plants Fossil Energy Project Other Activities Map of Existing and Planned Generation Facilities POWER DISTRIBUTION DIVISION... 47 Distribution Facilities Distribution Facilities Financed out of EIB Loan in 2010 POWER SUPPLY DIVISION... 53 Payment Collection Relations with Customers ENVIRONMENTAL PROTECTION POLICY... 58 Hydrometeorological System Information Center Environmental Protection Activities CONCLUSION... 62 Management Board s Report Supervisory Board s Evaluation of Company s Performance Assembly s Evaluation of Performance 3 ANNUAL REPORT 2010.
GENERAL MANAGER S REPORT In 2010, performance of Elektroprivreda Hrvatske zajednice Herceg Bosne, d.d. Mostar was good. In spite of difficult circumstances caused by the crisis, performance of all organizational parts was very good due to good coordination of all officials and rational use of the available resources. Compared with the previous year, power generation increased by 34%. The Company operates seven hydro power plants. Thanks to good operating conditions and favourable hydrological circumstances, the total power generation in 2010 was 2,604.67 GWh. The gross income (mainly from sales of electricity and services) was BAM 382,991,119 or 23% higher than in the previous year. The Company operated at a profit of BAM 40,746,515. The amount of BAM 59,390,013 was invested in various projects in all organizational parts. Continuous investment in the distribution network contributed to loss reduction by 1.3% at all distribution voltage levels. The collection rate was 98.73% (European average) or 1.73% higher than the plan. At the same time we worked on safe and quality supply to all customers. The newly constructed HPP Mostarsko Blato was put into operation in 2010. This multipurpose and complex power-generating plant - civil structure worth BAM 140,000,000 was constructed within four years. In addition to power generation, it will contribute to the field flood protection and agricultural production. In February 2010, the FBiH Government approved a decision confirming the existence of a public interest for construction of priority power-generating plants. According to this decision, Elektroprivreda Hrvatske zajednice Herceg Bosne will construct 11 generating plants including six hydro power plants, four wind farms and the integrated lignite mining and power project. The total investment value of these generating plants is about BAM 3,200,000,000. The above-mentioned projects are in different stages of preparation and construction. We particularly worked on promotion of renewable energy sources and greenhouse gas emission reduction. This was con- ANNUAL REPORT 2010. 4
firmed by laying the foundation-stone for construction of the first wind farm in BiH Mesihovina Tomislavgrad with the planned annual output of 128-146 GWh. Its construction will cost BAM 155,000,000. The major portion of funds was provided out of the German Development Bank KfW loan and the rest are our own funds. Construction of new generating plants will contribute to development of economy and industry and offer new possibilities for employment and business for many contractors. In addition, traffic infrastructure will be improved and there will be many other benefits for the large social community. In 2010, considerable funds were invested in other renewable energy projects as well as in revitalization and modernization of the existing hydro power plants, construction and reconstruction of the distribution network and facilities, and the projects of systematic improvement and modernization of the business operation. One of the projects for construction and reconstruction of the distribution facilities and network worth BAM 21,000,000 was implemented and financed out of the European Investment Bank (EIB) loan. The project for installation of remote reading meters in substations was also completed and installation of remote reading meters for households is in progress. Meeting the European standards in the field of information technologies, JP Elektroprivreda HZHB d.d. Mostar is one of few companies that use the Customer Billing and Information System Hepbilling, Business Intelligence System bins2 and Financial Management Information System FMIS. Implementation of the Human Resources Management System started. We kept on maintaining and improving business relations with all interested parties both in our system and the social community. The Company is oriented to satisfaction of all employes and customers. Improvement of our relations with customers and timely informing; relations centralization; and more efficient, fast and professional communication with all types of support are implemented through the Customer Relations Unit. Its Information Center that will be put into operation very soon. Completion of the started and launching of the new projects in accordance with the decisions of the Company s majority owner the FBiH Government; safe, reliable and quality supply to customers at all voltage levels; network loss reduction; and keeping the achieved collection rate remain our main objective. We keep on monitoring and reducing the operating expenses in all business activites with the successful power system control and new investments in human resources of JP Elektroprivreda HZ HB. Mato Žarić General Manager GENERAL MANAGER S REPORT 5 ANNUAL REPORT 2010.
ANNUAL REPORT 2010. 6 COMPANY PROFILE
MISSION The mission of JP Elektroprivreda HZ HB d.d. Mostar is quality, reliable and secure power generation, distribution and supply, and development of new power facilities according to the development needs of users in line with the development plans of Bosnia and Herzegovina. In achievement of its mission, JP Elektroprivreda HZ HB d.d. Mostar will follow its objectives: Sustainability of overall development Implementation of worldwide experience and ideas in power activities Business efficiency Development of competencies of specialists needed in power activities Support to partners in similar activities JP Elektroprivreda HZ HB d.d. Mostar has a specific role in the process of integration of Bosnia and Herzegovina into the European energy area. VISION JP Elektroprivreda HZ HB d.d. Mostar wishes to become the main driving force of economic development in the areas of its responsibility and an active participant in the overall development of. Bosnia and Herzegovina. All of our development programs should enable development of other activities for the benefit of all citizens of Bosnia and Herzegovina primarily for our benefit through the power system development STRATEGY The top-priority medium-term objective of JP Elektroprivreda HZ HB d.d. Mostar is finding a solution for balancing power generation and increasing electricity demands primarily by construction of renewable sources taking into consideration the principles of sustainability and decrease in electricity imports.this objective will be accompanied by establishing the system. of management of quality, environment and business risks in the existing processes and investment projects COMPANY PROFILE 7 ANNUAL REPORT 2010.
QUALITY MANAGEMENT POLICY In the global liberalization and power sector restructuring, the systematic management of quality, and safety and environmental protection are important components of modern marketing and prorities in the business policy of JP Elektroprivreda HZ HB d.d. Mostar. Quality is important in all parts of the Company. Each employee must know his role, and rights and liabilities in achieving the set business objectives for the Company to be efficient, open, prepared for marketing, cooperation with partners and investment. The quality management system is based on the principles and requirements of the internationally recognized standard ISO 9001:2008 in compliance with legal provisions, the Articles of Association and decisions of the Company, relevant conventions and directives, guidelines, recommendations, norms and requrements of customers and other interested parties. The Management Board is determined to implement the quality management policy in the business operation of the Company. MARKET ORIENTATION The main task of JP Elektroprivreda HZ HB d.d. Mostar is to meet the quality requirements of our customers and partners. This includes reliability and safety in power supply and service providing. Customer satisfaction is the key indicator of quality of our product and services and condition for business success and existence. PROCESS ORIENTATION The business operation of our Company is oriented to standardized, reliable and efficient busines processes that are permanently improved. The process-oriented and defined control system with defined functional and process competence, and documented implementation of all procedures is a guarantee for quality. Each business process is implemented according to internal rules (procedures and instructions) and has a method of measurement of efficiency of labor with clearly defined parameters, criteria and competence. DECISION MAKING BASED ON FACTS Business decisions are based on data and information analyses, checking, and comparison of own results with the results of similar companies in the area. PERMANENT IMPROVEMENT In our busines system, there is nothing so good that it could not be better. We always have to check if a method is proper or if it is necessary to simplify or improve it. A permanent task ANNUAL REPORT 2010. 8
of all employees is to improve business processes, product and services taking into consideration quality, costs and time. COMMITMENT, TECHNOLOGICAL AND WORKING DISCIPLINE We should have competent, trained and highlymotivated workers, team work, and technological and working discipline. Each activity in implementation of our processes requires commitment and discipline. Breach of technological and working discipline has a direct impact on risk and safety management. PERMANENT MONITORING OF SUPPLIERS Our facilities, plants and devices should be high-quality and special consideration is given to the selection of designers, suppliers and contractors. All suppliers should be continuously checked and verified. We do our best to make our suppliers and partners satisfied with our cooperation and to fulfil all our obligations. EMPLOYEE SATISFACTION The Management Board tries to increase the employee satisfaction and company loyalty. This encourages employees to accept quality, safety and environmental protection as well as the proposed life style and work method. Implementation of this policy is an obligation of all employees. Non-fulfilment of this obligation is considered a breach of the working discipline. 2010 GENERAL DATA Capacity of hydro power plants (MW) 852 Power generation ( GWh ) 2,604.67 Electricity Exports GWh 359.04 Distribution lines km (< 110 kv) 11,726 Installed power of substations (MVA) 1,103 Distribution network losses 9.49 %* 15.77 %** Number of customers 186,297 Number of employees 1,815 Average electricity price for households EURct / kwh 6.71 EUR ct/kwh (13.13 pf/kwh) Collection rate 99.19 % Realized profit BAM 40,746,515 Losses **15.77 % for distribution consumption including BSI Jajce at 35 kv *9.49 % for distribution consumption and consumption at 110 kv or above COMPANY PROFILE 9 ANNUAL REPORT 2010.
ANNUAL REPORT 2010. 10 ORGANIZATION CHART
11 ANNUAL REPORT 2010.
GOVERNING BODIES Shareholders Assembly The Shareholders Assembly is composed of shareholders. It decides on matters determined by the Law and Articles of Association. Meetings of the Shareholders Assembly are convened once a year at least for reporting on the Company Business Report that includes the financial statements and reports of the Independent Auditor, Supervisory Board and Audit Board. Jerko Pavličević Chairman of Supervisory Board Karmela Miletić Member Supervisory Board The Supervisory Board consists of seven members appointed and revoked by the Shareholders Assembly pursuant to the Law (two members were appointed on April 12, 2010). It supervises the business affairs of the Company and decides on other matters determined by the Law and Articles of Association. The meetings of the Supervisory Board are held as circumstances require but once in three months at least. Maid Ljubović Member Ante Kolobarić Member Audit Board The Audit Board consists of three members. Obligations and responsibilities of the Board are determined by the Law and Articles of Association. Ivan Zane Member ANNUAL REPORT 2010. 12
Matan Žarić General Manager Management Board The Management Board manages the business affairs of the Company, represents and acts for the Company and is responsible for regularity of operations. It consists of seven members (General Manager and six Executive Directors). Mila Bule Executive Director of Economic Affairs Division Ilija Bakalar Executive Director of Power Distribution Division Branka Dadić Executive Director of Legal Division Stipe Bagarić Executive Director of Power Supply Division Ivica Čule Executive Director of Power Generation Division Stjepan Krasić Executive Director of Development Division GOVERNING BODIES 13 ANNUAL REPORT 2010.
Basic Legal Data 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. In 2004, the 10% state capital of the Company was privatized. The Company bodies are appointed according to the Articles of Association : the Shareholders Assembly, Supervisory Board, Audit Board, and Management Board (general manager and executive directors of the Company). Identification number: 4227248350007. VAT ID No: 227248350007. The Company stock capital amounts to BAM 736,166,000 and is divided into 7,361,660 ordinary shares. The nominal value of a share is BAM 100.00. The stock capital consists of: 10% private capital and 90% state capital Home trade activities of the Company are: power generation, distribution and supply, trading, representing and in the domestic electricity market, manufacture of distribution control equipment, manufacture of other electrical equipment, generation of hydro, thermal and other power, power transmission, sale and distribution, construction and maintenance of civil engineering and building construction facilities and their parts, construction and maintenance of hydro power plants, electrical installation and other installation work, agency services in specific products trade, wholesale of machines for industry and other business activities. Foreign trade activities of the Company are: Imports of electricity and goods, and providing services included in the registered activities Exports of electricity and goods, and providing services included in 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 ANNUAL REPORT 2010. 14
Structure of Company Shareholders in 2010 In 2002, the public subscription for shares in the second round was carried out and the 10% total capital amounting to BAM 73,616,600 was sold. On December 1, 2010, there were 1,635 shareholders. Legal entities (residents and non-residents) own 7,172,435 shares and physical persons(residents and non-residents) 189,225 shares. The largest share among legal entities is owned by the FBiH Government (6,626,306 shares or 90%) and the rest is owned by investment funds, banks, and other legal entities and physical persons residents and nonresidents. Stock Trade SASE At the beginning of the reporting period (on January 5, 2010), the JPEMR * share value was BAM 55; on June 23, 2010 BAM 41.76 and at the end of the reporting period (on December 23 2010) BAM 54.00. 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 stock capital of this company was increased by investment of the member Konstruktorinženjering d.d. Split. This resulted in the decrease of our Company share to 14%. In the period January December 2009, the company Konstruktor-Neretva d.o.o. Čapljina operated at a gross profit of BAM 16,473. 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%. In 2010, this company operated at a gross profit of BAM 60,493. * Name of JP Elektroprivreda HZ Herceg-Bosne d.d. Mostar in the Sarajevo Stock Exchange (SASE) since September 15, 2004. BASIC LEGAL DATA 15 ANNUAL REPORT 2010.
HUMAN RESOURCES Employee Qualification Structure Educational level Power Generation Division Dec.31, 2009 Dec.31, 2010 Power Distribution Division Dec.31, 2009 Dec.31, 2010 Dec.31, 2009 Power Supply Division Dec.31, 2010 Company s Division and other organizational units Dec.31, 2009 Dec.31, 2010 Dec.31, 2009 Total Dec.31, 2010 1 2 3 4 5 6 7 8 9 10 11 12 13 Unskilled 35 32 27 37 4 4 1 1 67 74 110,4 4 Index 11/10 Structure in % Semi-skilled 2 2 19 14 2 2 1 0 24 18 75,0 1 Skilled 70 70 181 158 67 41 5 5 323 274 84,8 15 Second. chool 129 130 224 240 170 169 25 19 548 558 101,8 31 Highly-skilled 74 72 227 261 23 44 2 1 326 378 116,0 21 Assoc. degree 26 27 54 54 15 19 10 11 105 111 105,7 6 B.Sc. 85 89 104 123 58 69 105 115 352 396 112,5 22 M.Sc. 2 2 2 2 1 0 0 0 5 4 80,0 0 D.Sc. 1 1 0 0 0 0 1 1 2 2 100,0 0 Total 424 425 838 889 340 348 150 153 1.752 1.815 103,6 100 On December 31, 2010 JP Elektroprivreda HZ Herceg-Bosne d.d. Mostar had 1815 employees. In comparison with the end of 2008, the number of employees increased by 3.6% or 63 employees. Comparing the qualification structure of the employees at the end of 2009 and at the end of 2010, the number of employees having a university degree increased by 12.5% and of highly-skilled employees by 16%. In 2010, we employed 80 trainees. We kept on awarding scholarship to university students, reffering our employees to workshops, training courses and other types of education and training. ANNUAL REPORT 2010. 16
Employee Qualification Structure as of December 31, 2010. Total number of employees: 1815 M.Sc. - 4 Secondary school - 558 D.Sc. 2 Highly-skilled - 378 Unskilled - 74 Associate degree - 111 Semi-skilled - 18 B.Sc. - 396 Skilled - 274 Employee Age Structure Years of age Power Generation Division Dec.31, 2009 Dec.31, 2010 Power Distribution Division Dec.31, 2009 Dec.31, 2010 Power Supply Division Dec.31, 2009 Dec.31, 2010 Company s Division and other organizational units Dec.31, 2009 Dec.31, 2010 Dec.31, 2009 Total Dec.31, 2010 1 2 3 4 5 6 7 8 9 10 11 12 13 Under 30 42 50 112 113 54 61 56 54 264 278 105,3 15 Index 11/10 Structure in % 30-39 81 75 199 219 92 94 36 40 408 428 104,9 23 40-49 120 119 310 312 109 100 32 29 571 560 98,1 31 50-59 150 150 191 215 79 89 21 27 441 481 109,1 27 Over 60 31 31 26 30 6 4 5 3 68 68 100,0 4 Total 424 425 838 889 340 348 150 153 1.752 1.815 103,6 100 JP Elektroprivreda HZ Herceg-Bosne d.d. Mostar has a good age structure. About 39% are employees under 40 and this enables comparatively easy adjustment to new working and operating conditions. 1101 employees (60.7%) are of technical, 230 (12.6%) of economic and 484 (26.7%) of other (legal etc.) background. BASIC LEGAL DATA 17 ANNUAL REPORT 2010.
Employee Experience Structure. Total number of employees: 1815 Years of experience Power Generation Division Dec.31, 2009 Dec.31, 2010 Power Distribution Division 31.12. 2009. 30.12. 2010. Power Supply Division 31.12. 2009. 30.12. 2010. Company s Division and other organizational units 31.12. 2009. 30.12. 2010. 31.12. 2009. Total 30.12. 2010. 1 2 3 4 5 6 7 8 9 10 11 12 13 Under 10 80 89 199 220 102 103 86 90 467 502 107,5 28 Index 11/10 Structure in % 10-19 120 114 305 313 123 127 30 29 578 583 100,9 32 20-29 113 112 215 221 75 75 26 25 429 433 100,9 24 30-35 72 70 86 91 27 25 4 7 189 193 102,1 11 Over 35 39 40 33 44 13 18 4 2 89 104 116,9 5 Total 424 425 838 889 340 348 150 153 1752 1815 103,6 100 ANNUAL REPORT 2010. 18
COMPANY S PERFORMANCE In the period January December 2010, JP Elektroprivreda HZ Herceg-Bosne d.d. Mostar operated at a profit of BAM 40,746,515 due to exceptionally favourable hydrological circumstances resulting in 15.91% higher power generation than the revised plan and to good resource management. All hydro power plants overfulfilled their plans. As hydrological circumstances were exceptionally favourable, the PSPP Čapljina fulfilled its annual power generation plan in the first half of 2010 and overfulfilled the plan by 36.6%. Profit and Loss Account The total income amounted to BAM 382,991,119. It was 6% higher than the revised plan and 23% higher than in the previous year. The operating income (income from sales of electricity and services) amounted to BAM 369,480,600. It was 4% higher than the plan. The income from electricity sales included the income from sales to tariff customers at the distribution voltage levels (47.5%) and at 110 KV or above and other non-tariff customers (40.7%), and the income from international trade electricity exports (7.3%). The income from service sales in the domestic market amounted to BAM 16,717,492 (4.5%). The income from sales to tariff customers at 110 KV or above and income from electricity sales in the market included the income from electricity sales to the following customers: Aluminij d.d. Mostar (BAM 87,255,649), Elektroprivreda BiH (BAM 21,444,671), other non-tariff customers within BiH (BAM 59,574,441) and Railways of FBiH (BAM 97,818). The income from sales of services amounted to BAM 16,717,492. It included the income from electricity loss billing for the customers at 110 KV or above (BAM 3,889,494), the income from sales of services to third parties (BAM 12,827,998) consisting of the income from: issuing power connection certificates, design audits, maintenance 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). COMPANY S PERFORMANCE 19 ANNUAL REPORT 2010.
The other income (BAM 11,166,925) included the income from: donations, collection of adjusted receivables, compensations for damages from insurance companies, the income from previous years, penalties, reversal of long-term provisions, and other income. Bilanca uspjeha (KM) No Item Jan.-Dec. 2009 Realization Jan.-Dec. 2010 Revised plan Jan.-Dec. 2010 Realization Index 5/3 Index 5/4 1 2 3 4 5 6 7 1 Operating income (1.1.+2.+3.) 306.180.807 356.923.316 369.480.600 121 104 1.1. Income from electricity sales (1.1.1.+1.1.2.+1.1.3.+ 1.1.4.) 292.246.676 342.423.316 352.763.108 121 103 1.1.1. Income from tariff customers at distribution voltage levels 172.889.953 180.644.756 175.323.402 101 97 1.1.2. Income from other 35 kv customers 12.757.131 3.290.000 3.440.435 27 0 1.1.3. Income from 110 kv or above customers 93.595.016 88.074.560 87.353.467 93 99 1.1.4. Income from electricity sales in international market 13.004.576 70.414.000 86.645.804 666 123 2. Income from sales of services in international market 3.985.484 0 0 0 0 3. Income from sales of services in domestic market 9.948.647 14.500.000 16.717.492 168 115 4. Financial income 661.820 1.450.000 2.343.594 354 162 5. Other income 5.022.273 3.920.000 11.166.925 222 285 6. TOTAL INCOME (1+2+3+4+5) 311.864.900 362.293.316 382.991.119 123 106 7. Operating expenses (7.1.+7.2.+7.3.+7.4) 263.539.294 287.984.100 297.073.242 113 103 7.1. Costs of electricity purchases 95.863.576 90.780.600 99.145.399 103 109 7.2. Operating expenses 72.337.104 89.123.200 96.375.556 133 108 7.3. Depreciation costs 41.516.788 49.106.800 43.901.136 106 89 7.4. Staff costs 53.821.826 58.973.500 57.651.151 107 98 8. Inventory value harmonization expenses - 700.000 3.383.281 483 9. Financial expenses 1.844.619 3.545.526 2.979.887 162 84 10. Other expenses 23.137.086 35.500.000 38.808.194 168 11. TOTAL EXPENSES (7+8+9+10) 288.520.999 327.729.626 342.244.604 119 104 12. Gross profit/loss (6-11) 23.343.901 34.563.690 40.746.515 175 118 ANNUAL REPORT 2010. 20
The total expenses amounted to BAM 342,244,604. They were 4% higher than the plan and 19% higher than in the previous year. The operating expenses amounted to BAM 297,073,242, financial expenses (interest and negative exchange rate differences) BAM 2,979,887, other expenses BAM 38,808,194 and inventory value harmonization expenses BAM 3,383,281. The costs of electricity purchases amounted to BAM 99,145,399, depreciation costs BAM 43,901,136, staff costs BAM 57,651,151 and other operating expenses BAM 96,375,556. Other operating expenses were 8% higher than the plan due to the increase in the reservoir tax (index 107.2), water rate (index 115.8) and fee for Elektroprijenos (index 3.1) as a result of overfulfilment of the generation plan by 15.91 since these costs are charged per kwh of the generated power. The salary budget amounted to BAM 57,651,151 and was 7% bigger than in the previous year and 2% smaller than the plan. This decrease in the salary is a result of a different method of payroll computation in the Gross Profit and Loss Account through the SAP system since the previous year salary included taxable items and contributions on: jubilee cash awards, holiday cash grants, religious holiday allowances and compensations in kind, benefit and services.this method was used in preparation of the 2010 salary plan. The largest portion of other expenses included the bad and doubtful debts (BAM 37,383,646) written-off after one year. The remaining portion of BAM 1,424,548 included penalties and compensations for damages (BAM 162,484), subsequently determined expenses from the previous years (BAM 520,969), undepreciated value write-off (BAM 370,108) and other expenses (BAM 350,987). On December 31, 2009, the total receivables from the tariff customers at distribution levels, customers at 110 KV or above and customers abroad amounted to BAM 168,243,008, adjustment of receivables (BAM 96,148,503) and receivables after adjustment (BAM 72,094,505) that were 8.5% higer than the same receivables at the beginning of the year. Balance Sheet On December 31, 2010, the Company assets value was BAM 1,250,572,538. It was higher than on December 31, 2009 (index 103.9). The value of the fixed assets (real property, facilities and equipment, and long-term investments and loans) increased by 3.4% and of the current assets (home and foreign trade receivables, raw material and material inventories and other short-term receivables) by 8.8%. In the total assets, a share of the fixed assets was 89% and of the current assets 11%. COMPANY S PERFORMANCE 21 ANNUAL REPORT 2010.
In the liabilities, a share of the capital was 77%, of the long-term liabilities 18% and of the current liabilities 5%. In the long-term liabilities, a share of the long-term accruals and provisions was 37% and of the long-term credits 63%. The capital consists of the stock capital amounting to BAM 736,166,001.00, revaluation reserves BAM 254,834,515, retained earnings BAM 49,376,756, accumulated losses BAM 69,758,921 and other reserves BAM 5,524,740. Balance Sheet (BAM) No ITEM As of Dec.31, 2009 As of Dec.31, 2010 Share (in %) 1 2 3 4 5 6 I ASSETS Index 4/3 1 Fixed assets 1.075.824.029 1.112.176.917 89 103,4 2 Current assets 127.257.883 138.395.621 11 108,8 A TOTAL ASSETS (1+2) 1.203.081.912 1.250.572.538 100 103,9 Contingent assets 327.016.191 327.106.377 100,0 II LIABILlTIES 1 Capital 936.272.268 967.143.091 77 103,3 2 Ling-term liabilities (2.1+2.2) 211.483.104 225.350.881 18 106,6 2.1. Long-term financiai commitments 127.899.837 142.978.756 63 111,8 2.2. Long-term accruals and provisions 83.583.267 82.372.125 37 98,6 3 Current liabilities (3.1+3.2+3.3) 55.326.540 58.078.566 5 105,0 3.1. Short-term financiai commitments 10.628.781 11.221.698 19 105,6 3.2. Trade payables and other Iiabilities 42.100.173 42.711.608 74 101,5 3.3. Other current Iiabilities 2.597.586 4.145.260 7 159,6 B TOTAL LIABILlTIES (1+2+3) 1.203.081.912 1.250.572.538 100 103,9 Contingent liabilities 327.016.191 327.106.377 100,0 ANNUAL REPORT 2010. 22
Capital Structure as of December 31, 20010 Retained earnings (49,376,756) Revaluation reserves (245,834,515) Accumulated losses (69,758,921) Stock capital (736,166,001) Other reserves (5,524,740) COMPANY S PERFORMANCE 23 ANNUAL REPORT 2010.
Investments of JP EP HZ HB in 2010 Organizational part 2010 revised plan Total Own funds Loans Other Total 1 2 3 4 5 6 JP Elektroprivreda HZ HB d.d. Mostar 82.140.088 54.803.628 26.476.460 860.000 59.390.013 A. Power Generation Division 33.771.260 23.160.000 9.751.260 860.000 27.470.945 B. Power Distribution Division 35.260.923 18.985.723 16.275.200 0 27.205.569 C. Power Supply Division 3.830.000 3.830.000 0 0 1.752.950 D. Company s Division and Other Organizational Units 9.277.905 8.827.905 450.000 0 2.960.549 ANNUAL REPORT 2010. 24
2010 realization Own funds Loans Other Index 6/2 Index 7/3 Index 8/4 Index 9/5 7 8 9 10 11 12 13 29.861.886 28.713.867 814.260 72,3 54,5 108,5 94,7 17.599.830 9.056.855 814.260 81,3 76,0 92,9 94,7 7.580.289 19.625.280 0 77,2 39,9 120,6 0,0 1.752.950 0 0 0 0 0 0 2.928.817 31.732 0 31,9 33,2 7,1 0 The total realized investment amounted to 72.3% of the plan. The investment out of our own funds (index 54.5) was realized because temporary construction permits were not obtained (unsettlement or slow settlement of property disputes) and other permits necessary for the planned investment realization, and slow settlement of legal disputes connected to procurement of goods and services and work performance according to the Law on Public Procurement (bidders often appeal the Company s contract award decisions). COMPANY S PERFORMANCE 25 ANNUAL REPORT 2010.
Independent Auditors Report to the shareholders of JP Elektroprivreda Hrvatske zajednice Herceg-Bosne d.d. Mostar We have audited the accompanying financial statements of JP Elektroprivreda Hrvatske zajednice Herceg - Bosne d.d. Mostar ( the Company ) which comprise the statement of financial position as at 31 December 2010, and the statements of comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance on whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting principles used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Basis for Qualified Opinion 1. As explained in Note 16 to the financial statements, trade receivables disclosed in the corresponding 2009 figures included irrecoverable overdue amounts of KM 30,551 thousand for which the Company did not raise an impairment. The Company has recorded the impairment allowance relating to these irrecoverable overdue amounts in the current 2010 year income statement. International Accounting Standard ( IAS ) 8 Accounting Policies, Changes in Accounting Estimates and Errors, requires such an adjustment to have been recorded as a prior year adjustment and accordingly, the profit for the current year should be increased by KM 30,551 thousand and opening accumulated loss on 1 January 2010 should be increased by KM 30,551 thousand. 2. We were appointed as auditors of the Company on 29 March 2011 and thus did not observe the counting of the physical inventories as of 31 December 2010. We were unable to satisfy ourselves by alternative means concerning inventory quantities held at 31 December 2010. Since closing inventories enter into the determination of the financial performance and cash flows, we were unable to determine whether adjustments might have been necessary in respect of the profit for the year reported in the statement of comprehensive income and the net cash flows from operating activities reported in the cash flow statement. ANNUAL REPORT 2010. 26
3. As explained in Note 13 to the financial statements, the Company recognized the effects of the revaluation of donated property, plant and equipment as increase in deferred income liabilities of KM 30,544 thousand at the date of a prior revaluation, which is not in accordance with International Accounting Standard ( IAS ) 16 Property, plant and equipment which requires that an increase of asset s carrying amount as a result of a revaluation shall be recognized in other comprehensive income and accumulated in equity under the heading of revaluation reserves. Due to the nature of the accounting records of the Company, we are unable to determine the net effect of such accounting treatment to the balances for deferred income, revaluation reserves, accumulated loss income from donations and depreciation expense as at and for the year ended 31 December 2010 and prior 2009 related corresponding information. 4. The Company did not account for deferred taxation in accordance with International Accounting Standard ( IAS ) 12 Income Taxes in the financial statements of the Company as at and for the year ended 31 December 2010. Had deferred tax been accounted for in accordance International Accounting Standard ( IAS ) 12 Income Taxes, adjustments would have been made to increase deferred tax liabilities and decrease revaluation reserves by KM 24,583 thousand for the year ended 31 December 2010. Qualified Opinion In our opinion, except for the effects of the matters referred to in paragraphs 1 and 4 and except for the possible effects of the matter described in paragraphs 2 and 3 above under Basis for Qualified Opinion, the financial statements gives a true and fair view of the financial position as at 31 December 2010, and of its financial performance and cash flow for the year then ended in accordance with International Financial Reporting Standards. Other matters The financial statements of the Company as at and for the year ended 31 December 2009 were audited by another auditor who expressed a modified opinion in respect of valuation of trade receivables of BAM 30,551 thousand on those financial statements on 6 April 2010. KPMG B-H d.o.o. za reviziju Registered auditors Fra Anđela Zvizdovića 1 71000 Sarajevo Bosnia and Herzegovina 29 April 2011 For and on behalf of KPMG B-H d.o.o. za reviziju: Manal Bećirbegović Executive Director Senad Pekmez FBiH Certified Auditor License No. 3090044102 COMPANY S PERFORMANCE 27 ANNUAL REPORT 2010.
Map of power system in BiH in 2010 ANNUAL REPORT 2010. 28
POWER GENERATION DIVISION The Power Generation Division carries out the activities of preparation, planning and integration of power generation, regular and investment maintenance, research, revitalization of the existing plants, pre-construction and construction of new plants and other activities according to the Regulations of Internal Organization of JP Elektroprivreda HZ HB d.d. Mostar. The main organizational parts of the Division are: Executive Director s Office, Generation Control Department, Hydro Power Plants - Neretva River Basin Unit, Hydro Power Plants - Vrbas River Basin Unit and Unit for Pre- Construction and Construction of Generating Plants. All power is generated in hydro power plants with the total capacity of 852 MW and possible annual output of 2,277 GWh. Generating Plants Hydro Power Plants Put into Operation Installed capacity (MW) HPP Rama 1968 2 x 80 PSPP Čapljina 1979 2 x 220 HPP Mostar 1987 3 x 24 HPP Jajce 1 1957 2 x 30 HPP Jajce 2 1954 3 x 10 HPP Peć Mlini 2004 2 x 15 HPP Mostarsko blato 2010 2 x 30 In 2010, the main activities were regular maintenance and monitoring the generation process. The operating conditions in all hydro power plants were therefore very good. The plants generated 2,604.67 GWh (115.91% more than the plan). POWER GENERATION DIVISION 29 ANNUAL REPORT 2010.
HPP RAMA 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 1968. Number of generating sets 2 Main data Installed capacity 160 MW Plant type Diversion - storage Type 3-phase synchronous S-4758-16 Generators Manufacturer Končar Put into operation 1968 Nominal power 90 MVA Type Francis Turbines Manufacturer Litostroj Installed capacity 80 MW Dam construction height 103 m Dam and reservoir Dam height 96 m Hydraulic height 89 m Crest length 230 m Headrace tunnel length 9,536 m Headrace tunnel diameter 5,0 m ANNUAL REPORT 2010. 30
HPP MOSTAR The hydro power plant Mostar is the last plant in the range of the plants constructed on the Neretva river and is located 6 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. Number of generating sets 3 Main data Installed capacity 72 MW Plant type Adjacent-to-dam - storage Type 3-phase synchronous S-6546-40 Generators Manufacturer Končar Put into operation 1987/1988 Nominal power 30 MVA Type Kaplan K - 5 Turbines Manufacturer Litostroj Installed capacity 23.6 MW Dam construction height 44 m Dam and reservoir Dam height 28 m Crest length 255.6 m Crest elevation 81 m.n.m POWER GENERATION DIVISION 31 ANNUAL REPORT 2010.
HPP PEĆ MLINI 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 2004. Number of generating sets 2 Turbines Installed capacity 15 MW Plant type Type Diversion - run-of-river 3-phase synchronous Turbines Manufacturer Končar Put into operation 2004 Nominal power 18 MVA Type Francis K - 5 Turbines Manufacturer Litostroj Installed capacity 15.88 MW Upper reservoir level - maximum 252 m.n.m Upper reservoir level - minimum 249 m.n.m Dam and Reservoir Nominal discharge 15 m 3 /sec Headrace tunnel length 1,547 m Headrace tunnel diameter 3.6 m ANNUAL REPORT 2010. 32
PSPP Čapljina 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 1979. Number of generating sets 2 Main data Installed capacity 420 MW Plant type Reversible - pumped storage Type 3-phase synchronous Generators Manufacturer AEG Put into operation 1979 Nominal power 240 MVA Type Francis Turbines Manufacturer Riva - Calconi Manufacturer 250 MW Upper reservoir level - maximum 231.5 m.n.m Dam and reservoir Upper reservoir level - maximum 224 m.n.m Nominal discharge turbine mode 112.5 m 3 /sec Nominal discharge pumping mode 85 m 3 /sec Headrace tunnel length 8,110 m Headrace tunnel diameter 8.0 m POWER GENERATION DIVISION 33 ANNUAL REPORT 2010.
HPP JAJCE I 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 1957. Number of generating sets 2 Main Data Installed capacity 60 MW Plant type Type Diversion - run-of-river 3-phase synchronous Generators Manufacturer Končar Put into operation 1957 Nominal power 36 MVA Type Francis Turbines Manufacturer KMW Installed capacity 30 MW Minimum operating reservoir level 425.8 m.n.m Dam and reservoir Maximum operating reservoir level 427.1 m.n.m Headrace tunnel length 5,700 m Headrace tunnel diameter 5.4 m ANNUAL REPORT 2010. 34
HPP JAJCE II 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 1954. Number of generating sets 3 Main Data Installed capacity 30 MW Plant type Type Diversion - run-of-river 3-phase synchronous Generators Manufacturer Končar Put into operation 1954 Nominal power 12.5 MVA Type Francis Turbines Manufacturer Voith + Litostroj Installed capacity 10 MW Minimum operating reservoir level 326.5 m.n.m Dam and reservoir Maximum operating reservoir level 328.5 m.n.m Headrace tunnel length 2,880 m Headrace tunnel diameter 5.5 m POWER GENERATION DIVISION 35 ANNUAL REPORT 2010.
HPP MOSTARSKO BLATO Main data Generators Number of generating sets 2 Installed capacity Plant type Type Manufacturer 2 x 30 MW diversion Put into operation 2010. 3-phase synchronous Končar-generatori i motori, d.d. Zagreb Nominal power 35.300 kva Turbines Type Manufacturer Installed capacity Francis, vertical LITOSTROJ POWER d.o.o. Ljubljana 29,960 MW Dam and reservoir Dam construction height - m Dam height - m Hydraulic height - m Crest length - m Headrace tunnel length 2,207 m Headrace tunnel diameter 4.20 m The HPP Mostarsko Blato is located south-west of Mostar and uses energy potential at the head of 178m between Mostarko Blato and Bišće Field i.e. the Neretva river valley. The HPP Mostarsko Blato collects the Lištica catchment inflow water. This plant will not only be used for power generation but also for the field flood protection by construction of new structures of the headrace tunnel and enclosed flood channel to the Neretva river. ANNUAL REPORT 2010. 36
The plant consists of 9 civil structures - power facilities: reservoir, intake structure, headrace tunnel, surge tank and valve chamber, penstock, power house, tailrace basin, enclosed flood channel and linking transmission line. The preparation and construction started in 2006 and investment amounted to BAM 140 M. The annual output is 170 GWh and installed capacity 60 MW. Basic data on the HPP Mostarsko Blato: INTAKE STRUCTURE The headrace tunnel intake structure and headrace tunnel are situated 50 m south of the existing flood intake structure (the Varda tunnel). The intake structure consists of two parts. Its bottom is at the level of the headrace tunnel. HEADRACE TUNNEL The 2207 m long headrace tunnel is constructed through the Varda hill behind the intake structure. The bottom elevation at the entrance is 214 m and at the end 196.20 m. The headrace tunnel has a horseshoe cross section with a radius of 4.2 m. The reinforced concrete lining is 30 cm thick. SURGE TANK LOWER CHAMBER AND UPPER BASIN At the end of the headrace tunnel a surge tank is located to compensate the water oscillations within the system which are caused by load changes of the generating sets. The vertical shaft connects the 47.0 m long lower chamber and the upper basin which has a circular shape and volume of 3,000.0 m 3. VALVE CHAMBER The valve chamber is located downstream from the surge tank and its dimensions are 10.70x9.70 m. It houses the butterfly valve and is situated at the headrace tunnel entrance. POWER GENERATION DIVISION 37 ANNUAL REPORT 2010.
PENSTOCK The penstock with the internal diameter of 3m and the length of 360 m has 3 fix points and 2 deflection joints. Its underground section is 140 m long. POWER HOUSE The power house accommodates two 30 MW units. It is connected to the 110 kv overhead line. The power house is situated at the right Jasenica bank downstream from the stilling basin of the existing flood spillway on the toe of the hill Dobraljina. TAILRACE BASIN The tailrace basin has a volume of 10 000 m 3 and is situated downstream from the power house. It receives the water from the Jasenica river, HPP Mostarsko Blato and the existing flood spillway. It has a function to regulate the Jasenica river discharge and discharge to the flood channel or to the Neretva river. At the end of the tailrace basin 3 flaps for water discharge regulation are installed. TRANSMISSION LINE The new 110 kv transmission line connects the HPP Mostarsko Blato to the 110 kv Mostar 4 (Čule substation) Mostar 5 (Rodoč substation) transmission line included in the BiH grid. FLOOD CHANNEL The flood channel is constructed for evacuation of the total HPP Mostarsko Blato installed flow of 40 m3/s. This enables the plant operation independent on the Jasenica discharge downstream. The intake structure has two 5m wide spillways with gates.the capacity of the spillways with open gates is 2x20 m 3 /s. ENVIRONMENTAL IMPACT AND LOCAL COMMUNITY The Environmental Impact Study is a part of the Feasilbility Study for the HPP Mostarsko Blato prepared by Verbundplan from Austria. It confirms that construction of the HPP Mostarsko Blato has a minimum impact on environment. It does not jeopardize the existing state and in addition to power generation, it provides better field flood protection (increased water discharge to the Neretva river). This will considerably contribute to development of agriculture and other industries in the whole region. ANNUAL REPORT 2010. 38
Monthly Power Generation (GWh) in Hydro Power Plants in 2010 January February March April May June July August September October November December Total HPP Rama 57.862 59.307103.804101.085 91.865 78.748 67.163 57.691 67.549 77.108 35.680 85.043 882.905 PSPP Čapljina 141.001 154.142156.862 41.217 40.841 13.112 579 715 1.615 11.291 90.663 142.199 794.238 HPP Mostar 32.297 28.567 34.031 36.042 32.727 19.867 12.076 9.812 15.483 26.139 34.911 38.360 320.309 HPP Jajce 1 34.389 25.681 30.241 29.757 24.971 23.859 15.537 8.899 6.828 7.228 18.674 31.688 257.752 HPP Jajce 2 18.812 16.361 20.154 19.744 18.999 18.070 14.019 8.880 7.782 8.406 13.837 19.629 184.693 HPP Peć Mlini 17.727 19.089 20.254 15.224 10.932 4.340 1.517 745 641 1.146 13.249 18.857 123.720 HPP M. Blato 0 0 0 0 6.585 11.985 0 0 0 0 9.489 12.991 41.050 Total 302.087 303.148 365.345 243.069 226.920 169.982 110.890 86.740 99.880 131.318 216.502 348.769 2.604.667 200.000 HPP M. Blato 150.000 HPP Peć Mlini HPP Jajce 2 100.000 HPP Jajce 1 50.000 HPP Mostar PSPP Čapljina 0 January February March April May June July August September October December prosinac HPP Rama POWER GENERATION DIVISION 39 ANNUAL REPORT 2010.
HPP Rama - 34% HPP Jajce 2-7% PSPP Čapljina - 30% HPP Peć Mlini - 5% HPP Mostar - 12% HPP M. Blato - 2% HPP Jajce 1-10% Power Generation Trend from 2000 to 2010 (GWh) HPP Rama PSPP Čapljina HPP Mostar HPP Jajce I HPP Jajce II HPP Peć Mlini HPP M.Blato Total 2000 653,80 121,65 181,13 197,95 152,63 1307,17 2001 722,90 283,18 197,34 226,81 170,31 1600,54 2002 455,00 117,00 199,00 229,00 173,00 1173,00 2003 570,00 162,00 200,00 163,00 137,00 1232,00 2004 674,98 327,20 257,10 241,48 161,00 6,89 1668,65 2005 729,26 317,59 239,02 240,63 173,65 68,53 1768,69 2006 864,64 331,68 242,47 229,07 161,70 55,22 1884,79 2007 467,03 111,24 193,33 170,90 141,79 39,79 1124,07 2008 557,31 115,42 250,25 209,21 152,38 71,08 1355,64 2009 805,82 386,28 257,33 232,64 166,72 91,03 1939,82 2010 882,91 794,24 320,31 257,75 184,69 123,72 41,05 2604,67 2,500 2,000 1,500 1,000 500 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 ANNUAL REPORT 2010. 40
CONSTRUCTION OF GENERATING PLANTS In order to have our own development program and to meet the demands of our customers, we has been continuously working on the projects for use of renewable energy sources: wind, water and fossil fuels. In addition, preparations are made for the project of use of solar energy and possible gasification in the areas of responsibility of the Company. 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. On February 15, 2010, the FBiH Government approved a decision confirming the existence of a public interest for construction of 28 priority power-generating plants. According to this decision, Elektroprivreda Hrvatske zajednice Herceg Bosne will construct 11 generating plants. Item Installed capacity Output Construction duration To be put into operation Investment Construction workers New employees MW GWh years year mil. euros man/year No Thermal Power Plants 550,00 3.000,00 1.100,00 6.000 790 Mine and TPP Kongora 550,00 3.000,00 5 2018. 1.100,00 6.000 790 Hydro Power Plants 162,60 445,70 203,76 2.050 81 PSPP Vrilo 64,00 242,96 4,5 2015. 89,11 400 25 PSPP Kablić 52,00 73,13 3 2021. 58,42 400 25 HPP Han Skela 12,00 52,00 2 2015. 29,50 300 10 HPP Ugar Ušće 11,60 33,19 2 2016. 12,87 350 7 HPP Vrletna Kosa 11,20 22,54 2 2018. 6,93 300 7 HPP Ivik 11,20 21,88 2 2017. 6,93 300 7 Wind Farms 200,00 626,11 316,72 1.270 62 WF Borova Glava 52,00 149,62 3 2017. 78,00 350 16 WF Mesihovina 44,00 128,53 3 2013. 78,00 300 14 WF Velika Vlajna 32,00 89,36 3 2015. 52,72 220 10 WF Poklečani 72,00 258,60 3 2016. 108,00 400 22 Total 912,6 4.071,81 1.620,48 9.320 933 Note: Small hydro power plants are not included. POWER GENERATION DIVISION 41 ANNUAL REPORT 2010.
Project Activities WIND FARMS WF Mesihovina The Loan and Project Agreement and the Financing Agreement for construction of the wind farm Mesihovina were signed between KfW, Bosnia and Herzegovina, the Federation of BiH and JP Elektroprivreda HZ HB d.d. Mostar in Sarajevo on February 23, 2010. The Preliminary Design was prepared. The General Design for the 20/110 kv ST Gornji Brišnik was prepared. The Land Acquisition and Compensation Study was prepared. The procedure for selection of the consultant Fichtner GmbH&CO KG was carried out. The Waste Management Plan was prepared. On the basis of the prepared Expropriation Study for the wind farm Mesihovina, the Tomislavgrad Municipal Council approved a decision confirming the existence of a public interest for construction of the wind farm Mesihovina. The procedure for obtaining the urban permit from the Federation Ministry of Physical Planning started (15 permits obtained by the end of 2010). The WF Mesihovina Unit was set up, a temporary prefabricated building was constructed in Tomislavgrad and the access road to the WF Mesihovina was constructed. The measuring sensors were replaced at the site of the 50m high measuring mast. WF Velika Vlajna/Jastrebinka The Feasibility Study for the wind farm Velika Vlajna/Jastrebinka was prepared. The field visit, bases preparation, geodetic survey, geological prospecting and investigations for the needs of the Feasibility Study for the wind farm Velika Vlajna/Jastrebinka and the Prior Environmental Assessment were carried out. The General Design for the 20/110 kv ST Jastrebinka was prepared. The measuring sensors were replaced at the site of the 50m high measuring mast. The Waste Management Plan was prepared. The prior water permit for the wind farm Velika Vlajna/Jastrebinka was obtained. The procedure for obtaining the concession from the relevant canton ministry and consent from the city of Mostar started. The document Application for Issuing an Environmental Permit for the Wind Farm Velika Vlajna was prepared and the procedure for obtaining the environmental permit from the Federation Ministry of Environment and Tourism started. ANNUAL REPORT 2010. 42
WF Poklečani The 50m high measuring mast with the highly precise measuring equipment was installed. The preliminary Feasibility Study for the wind farm Poklečani was prepared. The project was nominated for getting a grant for preparation of the Feasibility Study and Environmental Impact Study from the Western Balkan Investment Framework (WBIF) Fund. The field visit, bases preparation, geodetic survey, geological prospecting and investigations for the needs of the preliminary Feasibility Study for the wind farm Poklečani and the Prior Environmental Assessment were carried out. The procedure for obtaining the concession from the relevant canton ministry and consent from the town of Posušje started. WF Borova Glava The measuring sensors were replaced at the site of the 50m high measuring mast. The General Design for the 20/110 kv ST Jurina Glavica was prepared. HYDRO POWER PLANTS PSPP VRILO The design documents for preparation of the Preliminary Design for the PSPP Vrilo (Construction Scope, Preliminary Design, Power Connection Study, Environmental Impact Assessment) were prepared and reviewed. The geodetic work was carried out at the upper basin site. The hydrological analysis was made and the need for establishing new hydrological stations (Kovači, Drina and Karlov Han) was confirmed. SHPP Mikronoge The tender procedure for preparation of the Feasibility Study for the SHPP Mokronoge was carried out and the preparation of the Feasibility Study was contracted. The Research Work Program, Study of Alternatives and Environmental Impact Assessment were prepared. The tender procedure for implementation of the Research Work Program for the Feasibility Study was carried out and the implementation of the Research Work Program was contracted. POWER GENERATION DIVISION 43 ANNUAL REPORT 2010.
HPP Jajce II - Preparation of the design documents for revitalization of the generating sets, increase of the dam height and construction of a small hydro power plant on the diversion tunnel 21 studies with computer simulations and analyses were prepared and reviewed. FOSSIL ENERGY PROJECT Kongora Lignite Mine and Thermal Power Plant The study Activities on Preparation of Documents for Integrated Lignite Mining and Power Project was prepared. Preparation of the tender documents, carrying out of the tender procedure, monitoring of preparation of the study Strategic Environmental Assessment The Inception Report for the Strategic Environmental Assessment was prepared. ANNUAL REPORT 2010. 44 OTHER ACTIVITIES The Catalog of Generating Plants of JP Elektroprivreda hrvatske zajednice Herceg-Bosne d.d. Mostar was prepared. The Catalog of Power Facilities of JP Elektroprivreda hrvatske zajednice Herceg-Bosne d.d. Mostar was prepared. The study Analysis of Wind Potential of Researched Wind Locations was prepared, JP Elektroprivreda hrvatske zajednice Herceg-Bosne d.d. Mostar. Participation in monitoring of preparation of the study Vrbas Rver Basin Integrated Water-Energy Study (financed by the World Bank) Carrying out of the tender procedure, monitoring of preparation of the study Techno Economic Analyses of Integration of Wind Farms into Power system in Areas of Responsibility of JP Elektroprivreda HB HB d.d. Mostar Carrying out of the tender procedure, monitoring of preparation of the study Gasification in Areas of Responsibility of JP Elektroprivreda HB HB d.d. Mostar. Preparation of the Terms of Reference for the study Possibilities of Use of Solar Energy for Power Generation The Study on Land-Slide Sites on the HPP Rama Reservoir Border was prepared. The General Design for the office building in Tomislavgrad was prepared. The Waste Management Plan for HPP Mostarsko Blato was prepared. The Waste Management Plan during Construction of Flood Channel Jasenica Neretva (HPP Mostarsko Blato) was prepared. Participation in preparation and review of ISO procedures
Map of existing and planned generation facilities of JP EPHZHB POWER GENERATION DIVISION 45 ANNUAL REPORT 2010.
ANNUAL REPORT 2010. 46
Power Distribution Division The Power Distribution Division carries out the activities of power distribution to customers, regular maintenance (inspection, control and overhaul) of lines and facilities and investment maintenance of distribution lines and facilities, activities related to telecommunications and information system and other activities according to the Regulations of Internal Organization of JP Elektroprivreda HZ HB d.d. Mostar. The main organizational parts of the Division are: Executive Director s Office, Distribution Area Unit SOUTH, Distribution Area Unit CENTER and Distribution Area Unit NORTH. This Division operates and maintains 11,431 km long 10, 20 and 0.4 kv distribution overhead and underground networks and a 295 km long 35 kv grid. The total installed power of the 35/10(20) kv substations is 85.5 MVA and of the 10(20)/0.4 kv substations is 1,017 kva. All employees are responsible for quality power distribution to customers. On December 31, 2010, there were 889 employees. The objective of this Division is continuous improvement of the distribution network and its operation through reconstruction and construction of facilities, and electrification of the areas of its responsibility. For this purpose, the amount of BAM 28M was invested in 2010. All construction and reconstruction projects to the value of BAM 21 M financed out of the EBRD and EIB loans were completed. POWER DISTRIBUTION DIVISION 47 ANNUAL REPORT 2010.
Distribution Facilities DAU Substations 110/10(20) kv substations 35/10(20)kV substations 10(20)/0.4kV substations Number of substations Installed power Number of substations Installed power Number of substations Installed power Length of overhead lines (MVA) (MVA) (MVA) (km) 1 2 3 4 5 6 7 8 DAU South (EP s property) 10 31 1.975 463.765 136,772 DAU South (third party s property) 1 0 464 246.615 75,4 DAU South (EP s +third party s property) 0 0 1 400 0 DAU Center (EP s property) 3 18,5 591 127.810 58,97 DAU Center (third party s property) 0 0 147 96.650 0 DAU North (EP s property) 3 36 242 62.600 20 DAU North (third party s property) 0 0 52 19.730 0 TOTAL EP S PROPERTY 16 85,5 2.808 654.175 215,742 TOTAL THIRD PARTY S PROPERTY 1 0 663 362.995 75,4 TOTAL EP s +THIRD PARTY S PROPERTY 0 0 1 400 0 Grand total EP HZ HB 17 85,5 3.472 1.017.570 291,142 Distribution facilities financed out of EIB loan in 2010 Mostar Unit Livno Unit Grude Unit DAU NORTH DAU CENTER LV networks 19 18 22 14 17 LV cable networks 3 1 8 0 1 MV cables 13 5 9 4 3 10(20) kv lines 7 3 14 4 6 Tower-mounted substations 4 2 8 4 1 Concrete-housed substations 12 3 6 1 9 Switchgears 3 0 1 0 0 SECTOS* 2 4 4 0 0 Total 63 36 72 27 37 Grand total 235 *Remotely controlled switch ANNUAL REPORT 2010. 48
Lines 35 kv MV lines 10(20)kV MV lines 0.4 kv LV lines Length of underground lines Total length Length of overhead lines Length of underground lines Total length Length of overhead lines Length of underground lines Total length (km) (km) (km) (km) (km) (km) (km) (km) 9 10 11 12 13 14 15 16 1,055 137,827 2.247,093 536,079 2.783,172 4.578,438 484,474 5.062,912 0 75,4 50,321 79,173 129,494 12,280 37,670 49,950 0 0 0,000 0,00 0,000 0,000 0,000 0,000 2,03 61 566,927 84,927 651,854 1.830,561 112,846 1.943,407 0 0 17,510 28,59 46,100 14,615 9,137 23,752 1 21 221,950 48,09 270,040 441,220 23,150 464,370 0 0 0,000 5,78 5,780 0,000 0,000 0,000 4,085 219,827 3.035,970 669,096 3.705,066 6.850,219 620,470 7.470,689 0 75,4 67,831 113,543 181,374 26,895 46,807 73,702 0 0 0,000 0,00 0,000 0,000 0,000 0,000 4,085 295,227 3.103,801 782,639 3.886,440 6.877,114 667,277 7.544,391 POWER DISTRIBUTION DIVISION 49 ANNUAL REPORT 2010.
Non-technical or commercial losses make the largest portion of the distribution network losses. These losses result from electricity thieving or non-recording through meters that are damaged or non-sealed. Intensified efforts on theft prevention as well as other activities (reading, meter replacement, investment in the network) resulted in considerable loss reduction. These results were achieved due to the following activities: Meter inspection. 49,832 meters were inspected and 417 customers thieved electricity. Meter replacement. 17,308 meters were replaced. Most of them were electronic meters with remote reading and monitoring. Meter relocation. Meters were relocated when customers thieved electricity and in transformer areas with increased losses. Organizational part Losses 2007 2010 (%) 2007 2008 2009 2010 2010-2007 Mostar Unit 19,63 18,53 18,24 17,59-2,04 Grude Unit 20,95 19,56 18,32 16,63-4,32 Livno Unit 15,40 15,57 15,25 15,48 0,08 DAU Center 19,22 18,37 17,73 15,96-3,26 DAU North 11,34 10,26 9,47 9,81-1,53 Total 18,69 17,73 17,12 16,18-2,51 25 20 15 10 5 0 2007 2008 2009 2010 TOTAL DAU NORTH DAU CENTER LIVNO UNIT GRUDE UNIT MOSTAR UNIT ANNUAL REPORT 2010. 50
The above-mentioned activities were carried out after the following conditions were met: Procurement of 15,780 electronic meters with remote reading, monitoring and switching on/off, and remote engaged power limiting for all customer classes (BAM 5.1M). Procurement of various polyester cubicles necessary for meter relocation (BAM 1.26M). Implementation of the contract for performance of earth and civil works necessary for meter relocation. In 2010, loss reduction was continued. Losses in 2010 (%) Organizational part Plan Realization Plan-Realization DAU South 15,72 16,93 1,21 DAU Center 14,61 15,96 1,35 DAU North 9,45 9,81 0,36 Total 15,00 16,18 1,18 20 15 10 5 PLAN-REALIZATION REALIZATION PLAN 0 DAU SOUTH DAU CENTER DAU NORTH Total POWER DISTRIBUTION DIVISION 51 ANNUAL REPORT 2010.
ANNUAL REPORT 2010. 52 2624 meters and 2442 modems for remote collection of the data on power consumption and other data were installed in the EP HZHB substations and the project of installation of these devices was completed. We will keep on installing these meters in substations not owned by EP HZHB as well as in the points of power exchange with other neighboring distribution companies. This will enable us to have all data on power flows in the distribution system. The collected data are stored in the database available to all relevant departments for review and processing.
Power Supply Division The Power Supply Division carries out the activities of power supply to tariff customers, data processing for power supply, settlement, billing and collection, and other activities according to the Regulations of Internal Organization of JP Elektroprivreda HZ HB d.d. Mostar. The main organizational parts of the Division are: Executive Director s Office, Customer Relations Unit, Supply Area Unit SOUTH, Supply Area Unit CENTER and Supply Area Unit NORTH. In 2010, the Division provided all customers with a quality and reliable power supply service. All employees are responsible for quality supply to customers. On December 31, 2010, there were 348 employees and 186,294 customers. Number of Customers by Supply Area Unit in 2010 Supply Area Unit SOUTH 121,118 Supply Area Unit CENTER 47,913 Supply Area Unit NORTH 17,263 Shares of Customers by Supply Area Unit (%) 9% SAU NORTH 26% 65% SAU CENTER SAU SOUTH POWER SUPPLY DIVISION 53 ANNUAL REPORT 2010.
Number of Customers by Class as of December 31, 2010: Class Number of customers 110 kv 3 35 kv 3 10(20)kV 140 Households 169,851 Other consumption 14,689 Street lighting 1,611 Total 186,297 Billed Electricity at Distribution Levels 1.87% 0.44% 12.76% 10 kv 62.18% 22.75% Other consumption Households Street lighting 35 kv Accepted Electricity by Supply Area Unit 7% 22% SAU NORTH 71% SAU CENTER SAU SOUTH ANNUAL REPORT 2010. 54
Payment Collection The main activity of the Division is payment collection as one of the key indicators of the quality and efficiency of all business operations of JP Elektroprivreda HZ HB d.d. Mostar. In 2010, the global crisis was an additional burden in payment collection. In spite of this, thanks to taking a number of intensified actions as well as to making a maximum effort and cooperation between all employees of the Power Supply Division, the collection rate at the distribution levels was 98.73%. Collection Rate in 2010: Supply Area Unit SOUTH 98.41 Supply Area Unit CENTER 99.06 Supply Area Unit NORTH 100.53 To avoid debt expiring, we brought a number of suits for debt. This was one of the extreme measures taken in payment collection. Number of Suits Brought for Debt: Supply Area Unit SOUTH 1,451 Supply Area Unit CENTER 400 Supply Area Unit NORTH 88 Total 1,939 Relations with Customers In line with our business policy, customers are the center of our attention and the whole business strategy is adjusted to them. In 2010, we intensified and improved communication with customers by developing all types of support, primarily by improving the activities of informing customers and the quality of correspondence in writing and of electronic and telephone correspondence. Improvement of our relations with customers and timely informing; relations centralization; and more efficient, fast and professional communication with all types of support are implemented through the Customer Relations Unit. Its Information Center that will be put into operation very soon. POWER SUPPLY DIVISION 55 ANNUAL REPORT 2010.
Daily Load Diagram 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Max (MW) 315 285 279 276 276 284 314 346 380 387 391 385 361 386 391 395 419 440 440 434 412 385 367 349 Min (MW) 238 219 213 208 208 213 233 271 143 266 285 288 291 294 296 289 285 283 274 277 290 302 285 256 Maximum load December 31, 2010 at 6 p.m. and 7 p.m. Minimum load June 10, 2010 at 9 a.m. Maximum and Minimum Hourly Loads by Month in 2010 Month I II III IV V VI VII VIII IX X XI XII Max (MW) 358 357 364 327 323 311 330 347 37 383 378 440 Min (MW) 185 199 196 162 186 143 202 197 188 212 223 236 500 Daily Load Diagram MW 450 400 December 31, 2010 June 10, 2010 350 300 250 200 150 100 Hours 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 ANNUAL REPORT 2010. 56
Delivered, Billed and Collected Electricity, and Prices in 2010 Item Delivered electricity (MWh) Billed electricity (BAM) Collected electricity (BAM) Collection rate (%) Selling electricity price (pf/kwh) Customers at distribution levels 1.137.670 175.323.402 173.092.478 98,73 15,41 Customers at 110 kv 962.314 90.793.903 90.862.057 100,08 9,43 Total 2.099.984 266.117.305 263.954.535 99,19 12,67 Delivered Electricity (MWh) Billed Electricity (BAM) 46% 54% 34% 66% Customers at distribution levels Customers at 110 kv Customers at distribution levels Customers at 110 kv Collected Electricity (BAM) 20,00 Selling Electricity Price (BAM) 15,00 34% 66% 10,00 5,00 Customers at distribution levels 0,00 Customers at distribution levels Customers at 110 kv Customers at 110 kv POWER SUPPLY DIVISION 57 ANNUAL REPORT 2010.
ENVIRONMENTAL PROTECTION POLICY JP Elektroprivreda Hrvatske zajednice Herceg Bosne d.d. Mostar carries out all activities according to the principles of sustainable development including responsible management, profitability, satisfaction of all interested parties and dynamic development that does not jeopardize environment. The Company s objective is achieving better results in environmental protection and it will take all available measures that will improve environmental protection in all organizational parts and activities. We will continuously monitor the impacts of our actions on environment and review methods to reduce harmful impacts of these actions. The environmental protection policy is based on principles of preventive actions and caution. These principles are as follows: Compliance with legal provisions, standards and EU directives in the field of environmental protection, Responsible behavior to environment through efficient implementation of the environmental protection policy according to the principles of sustainable development, Development of consciousness of responsible behavior of all employees to environment, Application of the best available technologies (clean, environment friendly technologies and materials), Optimum or responsible and rational utilization of natural resources, ANNUAL REPORT 2010. 58
Priority and intensive use of renewable energy sources, Permanent reduction, control and monitoring of emissions to air, water and soil, noise reduction and preservation of biodiversity, Continuous assessment of risk and possible incident impacts on environment, prevention and possible repair of the damage to protect the population and endangered environment, Inclusion of environmental protection requirements in development plans and projects and inclusion of environmental protection criteria in decision making processes, Mitigation of harmfulness and decrease in quantity of the produced waste, and proper waste management through its disposal and reuse, Reduction of energy losses in generation and the distribution network and promotion of energy efficiency with its customers, Informing the public about the environmental protection status in the Company through mass media and preparation of annual reports. In accordance with the promoted principles of environmental protection policy, employees will be educated and trained through the environmental protection program and encourage them to work in an ecologically responsible manner. The existing system of environmental protection monitoring shall be maintained and improved, and clear objectives of environmental protection management shall be set. Communication with NGO-s taking care of environment and other interested parties shall be provided through informing and public consultations about individual projects. Suppliers, consulting and designing firms, and other cooperating firms shall implement an appropriate environmental protection policy. The Management Board and General Manager are dedicated to implementation of the environmental protection policy in JP Elektroprivreda HZHB d.d. Mostar. ENVIRONMENTAL PROTECTION POLICY 59 ANNUAL REPORT 2010.
Hydrometeorological System Following the global environmental protection principles and developing consciousness of protection of water as one of the main links in power generation, JP Elektroprivreda HZHB d.d. Mostar established the hydrometeorological system for monitoring water quality and quantity in the flows in the areas of responsibility of the Company as well as for monitoring weather-related parameters (air temperature and humidity, rain amount, wind speed and direction) in the locations important for power generation and water supply to river basins. The system has been in operation since September 2004 when it was the only such system in the greater area. All stations are automated and connected through the remote data-reporting system. The system consists of 28 hydrological and 8 meteorological stations. In the hydrological stations water quality and quantity are measured: water temperature, ph value, redox factor, melted oxygen, saturated oxygen, specific conductivity, nitrate, ammonia, turbidity and total melted gases. The stations are equipped with all devices necessary for independent operation, monitoring and measuring parameters and with the remote data transmission system (through GSM signal) connected to its center in the headquarters in Mostar. Information Center Data are transmitted according to remote transmission requirements at regular intervals or at a call. A photovoltage system supplies the stations with clean energy. Its part is also the Hydras 3 software package, an application software for collection, processing and transmission of the measured values in the field of hydrology, meteorology and environmental protection. The Hydras 3 has a high performance database that enables many functions. The stations and devices are maintained according to standards. These automated stations and hydrological information system enable a simple and fast access to relevant data on qualitative and quantitative changes of water flows over time and space. This ensures more efficient operation and power generation optimization. Environmental Protection Activities JP Elektroprivreda HZHB d.d. Mostar has been continuously implementing environmental protection measures according to the adopted Environmental Protection Policy. Each development project of the Company starts with preparation of the Environmental Impact Study. We obtained environmental permits for all existing hydro power plants and the wind farm Mesihovina under construction.the procedure of obtaining environmental permits for other planned facilities is carried out according to legal provisions. We regularly stock reservoirs and the Neretva river with fish. ANNUAL REPORT 2010. 60
Employees are regularly educated and trained for preparation and introduction of the environmental protection system. Three employees acquired EOQ Certificates for EOQ Environmental Systems Manager. Electronic and electric waste is disposed by the selected certified firm in accordance with the Waste Management Procedure adopted by the Management Board of JP Elektroprivreda HZHB d.d. Mostar. We also started activities on preparation of a Project Plan for Construction of Temporary Dangerous and Undangerous Waste Disposal Facilities in the Company. ENVIRONMENTAL PROTECTION POLICY 61 ANNUAL REPORT 2010.
CONCLUSION MANAGEMENT BOARD S REPORT In 2010, the total power generation in the hydro power plants operated by our Company was 2604.67 GWh or 115.91% of the plan. Power generation in all hydro power plants was higher than the plan due to very favourable hydrological circumstances. The losses at the distribution levels (16.18%) were still higher than the plan (15%) but lower than in the previous year (17.21%). We kept on inspecting meters and classifying customers by transformer area. All distribution units relocated meters in transformer areas where big losses were noticed. There were activities on detection and categorization of possible meter faults that could increase total non-technical losses. In addition, we carried out activities on the project of installation of remote reading meters. 22 additional residential buildings were prepared for remote reading. All three supply area units intensified their activities on payment collection resulting in the collection rate of 98.73%. It was higher than the plan (97%). The Power Supply Division collected BAM 3.230.058 more than in 2009. The average price for customers at distribution levels was 15.41 pf/kwh. The number of suits for debt was significantly reduced due to efforts and actions of the Company taken according to legal provisions. Achievement of this collection rate had a positive influence on the Company liquidity. All liquidity ratios ratios of current liquidity, day-to-day liquidity, accelerated liquidity and financial stability were within the scope of the plan and better than in the previous year. Compared to the revised investment plan for 2010 (BAM 82,140,088), the realized investment amounted to BAM 59,390,013 or 72.3%. As a result of good performance in 2010, 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. ANNUAL REPORT 2010. 62
The investment indicators labour productivity and EPS (earnings per share) were better than in 2009. The economic indicators - coefficients of economy of all business activities, operating and working factors, and the coefficient of economy of financing were better than in 2009 and were at the level of reference. Taking into consideration the Company s performance in 2010, the Management Board set the following tasks to be carried out in the following period: 1. Launching development projects in accordance with the decisions of the Company s owner 2. Electricity loss minimization 3. Keeping the achieved collection rate 4. Control of operating expenses to minimize them in all business activities 5. Safe, reliable and quality supply to customers at all voltage levels 6. Successful human resources management in the Company SUPERVISORY BOARD S EVALUATION OF COMPANY S PERFORMANCE At the meeting held on February 25, 2011, the Supervisory Board unanimously adopted the 2010 Business Report of JP Elektroprivreda HZ HB d.d. The Supervisory Board expressed satisfaction with the good Company s performance and concluded that it was not only a result of favourable hydrological circumstances but also of good management of the Company that became one of the best companies in the public sector in this region. Having in mind a difficult economic situation, all employees have to be dedicated to work, carry out all tasks set by the Management Board and try to achieve even better results in the following period. CONCLUSION 63 ANNUAL REPORT 2010.
ASSEMBLY S EVALUATION OF PERFORMANCE At the 12 th meeting held on June 28, 2011, the Shareholders Assembly of JP Elektroprivreda HZ HB d.d. Mostar unanimously adopted the 2010 Company Business Report that includes the financial statements and reports of the Independent Auditor, Supervisory Board and Audit Board. The Assembly made the decision on distribution of profits of JP Elektroprivreda HZ HB d.d. Mostar for 2010 according to the directives of the Government of BiH Federation given to representatives of the state capital in bodies of public companies. The shareholders will be paid the dividends amounting to 40% of the profit or BAM 15,998,605.92 since the profit of JP Elektroprivreda HZ HB d.d. Mostar in 2009 was BAM 40,746,514.79. The determined dividend value per share was BAM 2.17. The above-mentioned decision also includes providing funds for legal reserves and donations in 2011. The Assembly s members expressed their satisfaction with the Company s performance that was very good. They supported the Management Board of the Company that is determined to keep on implementing a successful business policy. The Assembly also made the decision on additional home trade activities and on adjustment of activities to the Decision on Activity Classification in BiH, and the decision on amending the Articles of Association of JP Elektroprivreda HZ HB d.d. Mostar. ANNUAL REPORT 2010. 64