During the war most energy supply services that crossed the lines of confrontation were turned off or severed, damage to power distribution cables led to large-scale disruption in the generation and distribution of power throughout the country. The subsequent lack of maintenance, spare parts, and loss of transmission routes has led to further degradation within the system. Bosnia and Herzegovina has no known oil or gas reserves so these forms of energy must be imported into the country. The main sources of energy come from hydro-power, generated by various rivers in the country, and thermo-power, fuelled by the country’s coal reserves.

During the war emergency aid assistance provided some areas with limited services, but rehabilitation of the power system became essential upon the cessation of hostilities, first, to supply a population which is increasing due to the return of displaced persons and refugees, and second, to facilitate the growth in industrial production to encourage the revitalisation of the economy. The production of electricity for exportation can further assist in the process of economic recovery for Bosnia and Herzegovina.

In 1996 the EC provided approximately 40.8 MEURO for energy rehabilitation. 27.3 MEURO was committed through the Essential Aid Programme (EAP) for efforts in the rehabilitation of the electricity and gas supply facilities of Bosnia and Herzegovina. The EAP provided supplies and equipment to rehabilitate existing energy systems that included the Tuzla Thermo power station, the Kakanj Thermo power station, Elektroprivreda, Sarajevogas, and several coal mines in Bosnia and Herzegovina. A further 13.5 MEURO was allocated to various projects in the country for the rehabilitation of energy distribution networks.

In 1997 the EC allocated a further 20 MEURO to the sector. 10 MEURO for the repair of electricity distribution in Bosnia and Herzegovina. The programme focused on the supply of equipment and repair to damaged facilities for the distribution networks in priority return areas. The EC concentrated assistance on priority return areas in order to recover capacity in preparation for the return of refugees and displaced people and the expected resurgence of local industries. In addition, a further 10 MEURO was allocated for the rehabilitation of the energy sector in the Sarajevo area out of which approximately 5 MEURO went toward the rehabilitation of the district heating and gas supply network and the remaining 5 MEURO to the rehabilitation of the electricity distribution network.