Bosnia: HPP Vrbas project, bank guarantee of 1MEUR deposited for the project worth 165MEUR

, SEE Energy News

The company “HES Vrbas” Banjaluka, which was supposed to build two hydro power plants on Vrbas, deposited a guarantee of only slightly over one million euro for the 165 million euro worth investment. German company MBB WS Energy from Munich is the majority shareholder of HES Vrbas company.

The guarantee was supposed to be used to fulfill the previous conditions from the concession contract, signed at the end of November 2004, where only the value of the expropriation of the land was worth 4.7 million euro while the value of the work done on relocating the road M-16 and approach roads was 14.5 million euro.

Now this company is asking RS for a compensation of 23.5 million euro, for the lost profit, and they have already sent a compensation demand to the Government of the Republic Srpska and negotiations of two sides are ongoing.

In the information of the Working group of the Government of RS, that was formed in 2006, it is stated that the German company “MBB WS Energy GmbH” from Munich as the majority shareholder of “HES Vrbas” deposited a guarantee to the Government of RS of 1.028.000 euro by which it guarantees the fulfillment of previous conditions from the contract on concession. The guarantee was provided and deposited in the Ministry of finance of RS, according to this document.

When we asked to have an insight into this guarantee at the Ministry of finance, they told us that they do not have the guarantee, and that the ministry is not obliged to keep these guarantees. It turns out that nobody knows where the guarantee is since we found out earlier that it is not in the Ministry of industry, energy and mining of RS. So the question rises: How does the Government of RS  intend to enter the possible dispute in this case?

Also in the information from 2006, it says that “HES Vrbas”, with the approval of the Concession Commission of RS, transferred 79 percent of its rights and benefits to this German company on December 3, 2004, in order to obtain the means to fund the project. After conducting the procedure it says in the information that the structure of shares in “HES Vrbas” was such that MBB had 79 percent of the shares, “Viadukt” Portorož had 20 percent, and “Građevinar” from Kraljevo had 1 percent of the shares.

Also the working group of the Government of RS stated that during the writing of this information they had no proof from the concession company that they provided the construction of the funding of the project, which consists of the share capital of the concession company and loans. However from the decision on the registration of the company “HES Vrbas” from the County Commercial Court in Banjaluka in September last year it is visible that the total capital of this company is 26.000 euro which means that all the funding for the project should have come from the loans.

Petar Đokić, the minister of industry, energy and mining of RS, said in an interview for “Nezavisni”  that the request from the company “HES Vrbas” Banjaluka, for the compensation of 23.5 million euro from RS on behalf of investment and lost profits is unrealistic. He said that the Government of RS is currently in intensive negotiations with “HES Vrbas” to peacefully settle the dispute, and stressed that there is no need for an arbitrary procedure at this moment.

Yesterday, even after trying several times we have not managed to contact the representatives of the company “HES Vrbas” Banjaluka at the contact phone listed at the company’s web site, since nobody from the company answered the calls, transmits