Sovereign energy of Kosovo and non secure energy of the Balkan region

Posted on June 16, 2008
Posted By: Zorana Mihajlovic
Till year 1999 Kosovo declared unilateral energy independency from the Serbian energy sector. From that year, Serbia has no rights or opportunities to dispose as with energy resources as with energy generations within Kosovo.

Except rhetoric’s and mottos that Kosovo is part of the Serbia like the energy sector too, nine years the officials couldn’t do anything. For example, 8000 Serbian workers and their families in energy enterprises did exiled from Kosovo, and couldn’t come back.

Did the talks give better results if they have been started previous? Maybe they gave us clearer situation. It is serous question, but we all agree in one thinking. Those years a lot carried away for the Serbia not only in the energy, but in the economic field too.

If there are some symbolic quantity of energy recourses, behavior of the official’s wouldn’t be appropriate, without we know that Kosovo’s coal recourse are on the 2nd place in Europe and 5th in the world!

In today’s world there is no abdication of the recourses or status quo. Serbia isn’t lignite stipulation, but it’s sure she must do much more to solve the situations. Every day coal is picking in Kosovo, like electricity is generating in the thermal plant, but Serbia hasn’t anything from that. No production, no information. About 26 million tons of lignite pulled out in Kosovo from 1999. till today, and more than 20 million MWh produced. From Serbian point of view the problem is very grave, but from energy security of the region, it is serious obstacle – because of the situation neither production of coal or electricity generation are enough and optimal. On the other side, Serbia is 40% energy dependent, and lacks of electrical energy capacities. Serbia needs more and more energy in order to satisfy increasing demand for energy not only in industry but in transport and agriculture sector too. In what way will energy of this region go? How to solve questions of the energy recourse in Kosovo? What can be done, and what must be done? Financial effects of not-doing in this field could be millions of euros today, but they will raise progressive in coming years. That will affect on development at the whole region. It must be very clear – the state of the Serbia is still the owner of the energy resources in Kosovo. Question is, within which terms, standards and values? Someone must tell, or must negotiation about this. On Kosovo, today live about 1.9 – 2.2 million people, on the 10.000 km2 of land. Compare to 1971. population raised 93%, and continue all too 366% to 2051. year. Obviously that Balkan region will be center of the future political, economical and demographic event. Ethnical structure is on the side of Albanian populations and that is not for admirable. More than 85% of people are Albanian. But percent of youth below 20 is about 40% and this is for impressive for sure, because it is work competent population. On the other side, annual gross domestic product attaints $ 1500 per capita and raised 20% according to 2000.year. Inflation rate isn’t to high (2.5%), but unemployment is endemic and to high and reach 49% of population. Kosovo is the poorest region in the Balkan. Percent of population who live below $1.42/day is 45%, and other below $0.93/day is 15%. So, in Kosovo lives about 50% population below poverty line. That is frightening situations.

An foreign aid (private, humanitarian, grants to budget..) during last years declined to 15% of GDP versus 2000 (94%). On the other side, government investment raise (index 2005/2001=714). The announce Donors’ Conference for Kosovo in June will be organize by the United Nations and European Union and also bring some extra investment in the region.

Addition to a huge unbalance import versus export (2005/2001 import was 7.59 times bigger than export) it is necessary to know this will be an obstacle for the future economy. Future developments of energy resources will be affected by those entire cores tend factors.

Will energy sector of the Kosovo base at import fuel although energy unbalance, or at the local fuel – lignite? The answer will attack future energy development not only Serbian but Balkan’s too. Development energy strategy of Kosovo is very important in particular because of demographic projection. Today’s there are 370 thousand households with 6 to 6.5 capita per household. Additionally, the fuel structure for heating shows that electricity and wood are at most. Because of that, energy efficiency is unfavorable. Demand for electricity will rise for 114.9% or 191% to 2020.which dependence of projection development scenarios. If the government of Kosovo let (and they did) private investors to develop new and current mines and plants, consumption will be much higher. Because of that, Kosovo could become exporter of electricity.

Table 1 – Kosovo - Primary Energy Consumption (GWh)

Table 2 – Kosovo - Energy Consumption Structure (%)

In future years, the consumption of coal will rise for 90%, oil for 108% and wood only for 8%. But for the realization development scenarios it is necessary to exploit and production coal from local mines. Electrical energy sector in Kosovo consume more than 50% of the primary energy. From this primary energy it acquires only 30% of electricity. So, losses in conversion are too high, and that is problem for the system. Transmission and distribution losses are all too 44% official, and 60% in some non official assessment. About 30% is non technical losses, and 99% non legal connection to the grid. Even there were lot of help toward Kosovo’s electrical energy system by foreign companies and UNMIK it is clear that only with new thermal power plant the energy, ecology and economy efficient will be on the optimal level. Structure of the electricity consumption indicates ascendancy of household in very high level (70%). On contrary, share of industry is just 7.5%, and commercial and public sector about 20%. Despite on construction of capacity and other infrastructure, the most important energy recourses on Kosovo is coal – lignite. Globally coal today provides 25% of energy needs and generating 40% of world electricity. In worldwide structure of energy recourses the low level quality coal (lignite and sub-bituminous) share with 47%. As a matter of fact, price of coal and other energy products raised in previous years 4.8 times. Like coal will be viable for next 160 years, those countries who will choose modern clean coal technology could expect sustainable future.

Table 3 Kosovo - Quality of the lignite

If we look from the Serbian point of view, almost 76% hers energy resources are in three fountains in Kosovo: Kosovo, Metohija and Drenik’s fountain. Kosovo fountain has contraction of 63.3% of reserves. Lignite potential in those fountains is huge. Metohija fountain is list of all exploration, whereas Kosovo fountain is at least of exploitation (only 2% of exploitation reserves). Whole geological reserves in Kosovo fountain are 11.5 billion tons (exploitation about 8.8 billion tons), whereas reserves of Metohija fountain is 2.7 billion, and 1.5 billion tons. In contrast to those two lignite fountains, Drenic’s fountains are still no exploration and his geological reserves estimate about 500 million tons. From the year 1999, it was hard period for exploitation lignite in Kosovo. From that point of view Kosovo is not different from other non-stabile countries in the world. Whenever are some conflicts, civil wars or others especially in the region riches of energy, it is very difficult for whole region, because production couldn’t be on the high level. Kosovo is not exception.

Table 4 The average emissions from combustion of lignite and wood (g/GJ)

Additionally it is load by not adequate maintenance of equipment, inefficiency of its utilization, often breaks because of louse serving. Kosovo has energy law, energy institutions but still lot of problems in his energy sector. Par example, workers in the Kosovo Electric Power Utility receive part of their wages in coal. Every year they receive one track by 10 tons of coal. That means 80 thousand tons of coal goes yearly to the workers. It is too much for one household and one winter, so coal is possibly to find on secondary market. People trade with it. Big problem, along badly organized relations and high corruption level, is ecological problem. The price of lignite exploitation is very high and it can be quantify by level of green house gas emissions, or percent of declining agriculture land. Ashes emissions from B1 block (thermal power plant Kosovo B) are ten times higher than EU standards. The atmosphere receive every year about 70 thousand tons of dust or 200 tons every day!

Table 5 The electrical energy balance, 2005

Table 6 Kosovo – generation of electricity, MWh

Also, carbon dioxide emission is almost two times higher, nitrite oxide 15-120% higher from EU standards. In 2005 year, thermal power plants A and B let out about 5.8 million tons of carbon dioxide. Forecasts tell us about future emissions which will be much higher, about 16.8 million tons. Because of that, the state will pay probably about $ 84 million (proxy. $ 5/metric tons of emissions). In relation to, energy demand will be future electricity generation in Kosovo. Even that, it is possible to export some additional quantity of energy to the regional markets. Supply of the energy must be stabile and no interruption, with competitive price. According to his own energy strategy, Kosovo plans to produce minimum 30% of energy for export. For this it is necessary to normalize work of TPP Kosovo B and HPP Gazivode, develops new mine in north part of Kosovo, revitalizes Kosovo A, and build new power plant with 1000MW (through joint venture), and new hydro power plant by concession. Even that the Parliament of the Kosovo proclaims realization of previous, with necessity of building new TPP with maximum 1000 MW, with feasibility study, there are already lot of problems in the first phase – pre qualification for new TPP. In reality pre qualification supposed 2100 MW of new TPP, and not maximum 1000 MW. Kosovo is geographical little to absorbs additionally capacities of lignite exploitation, without disturbing the environment, as because population density (on the location plans for TPP Kosovo C population density is 600 /1km2) as because no adequate water resources. However the new thermal power plant will build because demand for energy raises not only in Kosovo but whole region. Pre qualification finished by few companies: Italian’s ENEL, German’s RWE, CHEZ, and American’s EnBW. To this, it is necessary to dash almost an sure projection of price raises in Kosovo, as for the creation a common market with unique standard and conditions (the Athens process and creation the Energy Community Eastern and South Countries of Europe), as possible future integration to the European Union and projection of Kosovo development. The assessment of investment in infrastructure project is about 3.6 billion €. From the new TPP Kosovo C it could be expect minimum 600 million €, and about 60 million € for the Kosovo’s budget.

Everything that is potential critical point of Kosovo’s energy strategy might be point of opportunity for Serbia. Kosovo is the poorest economy in Europe in the heart of Balkan region. Geographically it has its opportunities and short-comings too. On the terrorism point and organized crime of view, trade with drugs, people and arms, Kosovo is optimal route. The whole quantity of drugs for worldwide markets goes through Kosovo (65%). It is serious problems and could demonstrate on whole region future, as in security as in economy and energy.

For the security of the supply the Eastern and South Europe is transit of energy which goes though the Kosovo. With Kosovo’s territory it is possible to secure energy independent and stability not for Serbia but region. Question is: who will take those opportunities? A Serbia or a someone else? For now, Serbia is laterally. But she must think about that, even it is too painful for people in Serbia. First, relation with UNMIK must be better and construct in both way. Second, Serbia in a coalition with other neighbor countries could be important stability factor in the region. Third, she mustn’t be just a bystander. Whether she will be part of the new construction project of the Kosovo C, or new mines, or in infrastructure revitalization, but Serbia must cooperate with Kosovo. She does that today but in very small amount. Annually Serbia delivers products to Kosovo in amount about 300 million €. That is 13.6% share in a whole export. It will be normal from the Serbian electrical power company EPS and others public companies to start to work with Kosovo. An amount of the assets of EPS on Kosovo is about 3 billion $. It is an additional reason to cooperate with the Kosovo state, through the UNMIK. From the other side, through the Serbia is only way to transit energy to Kosovo’s consumers and 15% import energy for Kosovo goes through the Serbian territory.

Serbia must have a clear energy strategy and objectives for Kosovo. She could be a leader in this situation.

Authored By:
Madam Zorana PhD Mihajlovic Milanovic was born in 1970, on May 5th, in Bosnia and Herzegovina Federation (Tuzla town). She is married and has one child.

Primary and Secondary School finished in Belgrade, capital town of Serbia country, like the best in generation.

She wrote and published more than one hundred texts, about problems and availability in Serbian energy sector, in comparison with European unity countries, through the

Other Posts by: Zorana Mihajlovic

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June, 12 2008

Ferdinand E. Banks says

I once thought that I knew enough economics to be able to tackle any development quandary, but I'm no longer sure. However, if I were ever tempted to deal in this kind of topic again, I would get a complete set of the writings of the late Hollis Chenery. I taught from Chernery's work in Senegal, but unfortunately encountered him at a conference in Paris some years later, and whatever enthusiasm I had for these matters soon disappeared. Anyway, there is something about this article which leads me to believe that a Chenery type approach is warranted.

Fred Banks

June, 25 2008

Mihael Tomšic says

Any information contained in the article is skilfully hidden behind: 1. terrible English, worse than any possible machine translation from the Serbian, most probably the source language, 2. political confusion permeating the article.

Presentation of a balanced (multilateral) point of view was not the purpose of the author. He is presenting the extreme of the Serbian nationalistic point of view. The article that should present professionally clear information is a mere political pamphlet.

Editors should, in the interest of the quality of the newsletter, request a thorough rewriting of the article - and a readable, even if "poor continental" English.

Miha Tomšic

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