Bosnia and Herzegovina, RS seeking foreign experts for HPP Vrbas arbitration

, SEE Energy News

The Government of the Republic of Srpska (RS) has tasked state-owned power utility ERS to hire foreign experts for the arbitration procedure over hydropower plants on the Vrbas river, which it had lost in April, although is has no right for an appeal.

ERS said that the estimated value of the tender is around 40,000 euros and that the procedure is  ongoing. It should be noted that each month of delayed payment to Slovenian Viaduct will cost the Government additional 250,000 euros in interest.

The arbitration court in Washington ruled that RS has to pay 45 million euros to Viaduct due to the unilateral termination of the concession agreement for the construction of two hydropower plants on the Vrbas river.

In September 2016, Slovenian company Viaduct has filed a request to initiate arbitration procedure in order to seek compensation for damages caused by violating the provisions of the agreement on the protection of investments between Slovenia and Bosnia and Herzegovina, as well as the provisions of the Energy Charter Treaty also signed by both Slovenia and BiH.

Slovenian investor, through its local subsidiary HES Vrbas, has concluded a concession agreement with RS Government on 25 November 2004 for the construction of two hydropower plants on Vrbas river (HPP Krupa with 48.5 MW of installed capacity and HPP Banja Luka with 37.2 MW), which was terminated on 29 September 2015 due to non -realization.

The request to initiate arbitration proceedings was sent to the International Center of Settlement of Investment Disputes (ICSID) in Washington. Viaduct seeks 51 million euros in compensation from BiH. Bosnia and Herzegovina is only legally sued because it is impossible to address the Republic of Srpska as respondent in the arbitration proceedings. The claim of 51 million euros is almost double the amount (23.5 million euros) which was initially claimed by HES Vrbas in late 2015.