BiH/Republika Srpska: Satisfaction of some, dissatisfaction of others with Russian-Swiss investment in TPP “Ugljevik”

Published on 4. September 2014., SEE Energy News

Construction of two units, with installed capacity of 2×300 MW in thermal power plant “Ugljevik” in BiH will be the largest Russian investment if the project be realized. The investment is worth 750 MEUR. Investor Comsar Energy, Swiss-Russian-Cyprus holding company owned by Rashid Serdarov. Rashid Sardarov is present in BiH since 2011^th, and until today has founded five companies in Banja Luka: CERS, “Comsar Energy Trading”, “Comsar Hydro Energy”, “Energy Group Limited” and “Comsar Energy Agro”. All five are wholly or majority owned by his offshore company “Comsar Energy” LTD in Cyprus.

The unit construction has not yet begun, and as stated on the website of the Centre for Investigative Journalism, the reasons are the problems at the local level, as well as the documentation required for the project compliance with European standards. The problem arose when the union members of the Public Enterprise “Mine and Thermal Power Plant Ugljevik” (RITE) started to protest because RS government decided that most of the mineral resources belonged to the Russian investor Rashid Sardarov. As reported Cin.ba workers are in fear because due to this decision, a public company could stay without sufficient coal quantities for the plant operation in the next 25 years. They are also concerned because of operating conditions, for which they say that they are much less favorable than in the reservoir which got a Russian billionaire. However, since the RS Government is the majority owner of thermal power plant, it makes decisions, the company, or management company have no influence. And as mentioned, the biggest problem is that government all does without transparency and consulting experts. The union has vowed to continue to fight that the property of the entire chamber belongs to state-owned company.

Experts point out that no developed country was ceded neither coal nor electricity production to the private sector, as by this it loses the ability to offer electricity at a low price to the own economy and thus to make it more competitive in the market.

As a reminder, Sardarov received permission for coal mining, as well as permission for the construction and use of two new thermal power units in Ugljevik which would be followed up on the infrastructure of state power plants. Sardarov Company located in Cyprus – Comsar Energy Group Ltd will build the units. When the only remaining state-owned unit extinguished, two new will remain in the function, which majority owner will be Sardarov. Experts believe the reason for this is the gradual privatization of the power sector in RS.

In order to realize the project of construction of new units, was formed a joint venture “Comsar Energy Serbian Republic” (CERS) in which 90 percent of the property has Sardarov company, and 10 percent RS Government, namely RITE Ugljevik. According to the concession agreement from October 2013^th, CERS will build a thermal power plant of 600 megawatts, 2x300MW, and use it for the next 30 years. For its operation it will annually consume more than four million tonnes of coal from three deposits that have been assigned to CERS and where there is a total of 118 million tons of coal.

It is important to note that RITE “Ugljevik” has unresolved financial problems with Slovenia. Even during the eighties, the Slovenians were invested in the construction of the first units of the thermal power plant, and then in the construction of the second unit. The deal was that the debt be repaid by electricity delivery; however, the war also ended the construction of the second block and the agreed delivery of electricity to Slovenians. Now The Electric Power Industry of Slovenia is suing RITE “Ugljevik” and seeks damages of 715 MEUR. The dispute still is not resolved and therefore it is not possible to continue the started construction in the second unit, so it was decided to build units- three and four. However, the investor is allowed to use the existing infrastructure of state thermal power plant, which is another subject of dispute with Slovenia.

One of the representative of the Sardarov company said that the criticism of this project were motivated by personal interests of employees in RITE Ugljevik and citizens who believe that coal was theirs.

Rashid Sardarov is present in BiH since 2011^th, and until today has founded five companies in Banja Luka: CERS, “Comsar Energy Trading”, “Comsar Hydro Energy”, “Energy Group Limited” and “Comsar Energy Agro”. All five are wholly or majority owned by his offshore company “Comsar Energy” LTD in Cyprus.