Bosnia: Energy dispute, Slovenia asks 750 MEUR of compensation from BiH

26. August 2014. / SEE Energy News

Energy Company “Elektrogospodarstvo Slovenia” with headquarters in Maribor, as the legal successor of the Electric Power Industry of Slovenia, initiated an arbitration proceeding against Bosnia at the International Centre for Settlement of Disputes ICSID in Washington, after its claims were rejected in front of the courts in BiH. According to yesterday’s information from Banja Luka, the case is in ICSID protocol and registered on June 16th this year.

Slovenes seek compensation of 750 MEUR from BiH, and there have been included also serious interest of 35 MEUR, due to the Thermal power plant Ugljevik which is part of the Electric Power Industry of Republika Srpska. Namely, Slovenia has invested before the war one and BiH two-thirds of money to build the Thermal power plant Ugljevik which began operations in 1985. Thermal power plant was obligated to regularly deliver produced electricity to Slovenia in accordance with the amount of funds invested in its construction. That was the case until 1992nd when the supply was stopped due to the war in BiH.

Bosnia and Herzegovina and Slovenia signed an agreement on investment protection13 years ago and in 2007th Slovenes formally addressed to the Government of Republika Srpska and Electric Power Industry of Republika Srpska and offered a deal on resolving relationships. They relied on the contract for the resources management in the construction of the Thermal power plant Ugljevik, then to the right to manage the invested funds and a commitment to supply electricity to Slovenia. They also opened up the possibility of eventually invest in the construction of a new unit 2 in Thermal power plant Ugljevik.

However, the RS authorities and the leadership of RS Electric Power Industry passed over this proposal as it did not come, and the Slovenians went to court with lawsuits. The complaint was submitted to the District Economic Court in Bijeljina,but it declared incompetent and dismissed the complaint.

From 35 to 750 MEUR

Then the Slovenians submitted the complaint to Higher Economic Court in Banja Luka to the decision of Bijeljina, but Banja Luka received a rejection stating that Bijeljina solution was confirmed. After that, “Elektrogospodarstvo Slovenia” filed a lawsuit against the BiH state so ICSID from Washington will make a final arbitral decision.

It is interesting that the original Slovenian claim amounted to 35 MEUR increased to as much as 750 MEUR because in the meantime the Slovenians calculated every cent of the money and recalculated every detail of the case.

How will end the arbitration proceedings in Washington, it is difficult to predict. According to the rules, Slovenes initiated proceeding against BiH, and not Thermal Power Plant Ugljevik and Electric Power Industry of Republika Srpska, and if the decision is in their favor there will surely be a chaos in the country since BiH will have to pay compensation. For now there is no reaction from the RS Electric Power Industry and it turns out that they do not care.

It is interesting that before the war Slovenia invested certain funds in the construction of several units of Thermal Power Plant Tuzla. After the war, BiH Electric Power Industry, which owns the Tuzla Thermal power plant, has signed the agreement with Slovenia and has returned these funds to Slovenia through the electricity supply by 2003rd.

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